Working Paper: NBER ID: w17654
Authors: Casey B. Mulligan
Abstract: Inflation-adjusted spending on means-tested subsidies have increased sharply since 2007, and most of this growth was due to changes in eligibility rules, and increases in subsidies per eligible person, rather than increases in the number of people who would have been eligible under pre-recession subsidy rules. The non-elderly parts of the safety net have increased from about $10,000 per year of non- or under-employment by non-elderly household heads and spouses in 2007 to almost $15,000 per year in 2010, adjusted for inflation. From 2007 to 2010, inflation-adjusted safety net spending increased $35,000 for every added year of non-employment or under-employment. As a result, the average private returns to employment are substantially less than they were in 2007.
Keywords: Social Safety Net; Unemployment Insurance; Mean-Tested Subsidies
JEL Codes: E24; H31; H41; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased mean-tested subsidies (H53) | decrease in average private returns to employment (J49) |
| unemployment insurance expansions (J65) | longer unemployment durations (J65) |
| means-tested safety net (I38) | penalty for earning income (H26) |