Working Paper: NBER ID: w18088
Authors: Casey B. Mulligan
Abstract: Inflation-adjusted spending on means-tested subsidies has increased sharply since 2007, and most of the 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. In 2007, the non-elderly parts of the safety net paid about $10,000 in benefits per person-year that non-elderly heads of household or spouses were unemployed. By the end of 2009, the annual subsidy rate per person-year unemployed was up to $16,000. As a result, the average private returns to employment are substantially less than they were in 2007. One result of the paper is a monthly time series for the overall safety net's marginal income tax rate from the point of view of the average marginal worker.
Keywords: No keywords provided
JEL Codes: E24; H31; I38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in mean-tested subsidies since 2007 (H53) | higher marginal income tax rate for average marginal workers (H31) |
| higher marginal income tax rate for average marginal workers (H31) | reduction in private returns to employment (J49) |
| increase in mean-tested subsidies since 2007 (H53) | reduction in labor hours (J22) |
| changes in eligibility rules for programs like unemployment insurance and SNAP (I38) | increased fraction of unemployed receiving benefits (J68) |
| increased fraction of unemployed receiving benefits (J68) | affecting labor supply decisions (J29) |