Working Paper: NBER ID: w18591
Authors: Casey B. Mulligan
Abstract: Distributions of tax rates on job acceptance and layoff margins are estimated for unemployed household heads and spouses under three benefit and tax rule scenarios: actual rules under the American Reinvestment and Recovery Act, rules as they would have been if they had not been changed since 2007, and rules as they might have been with a bigger fiscal stimulus. Two or three million unemployed household heads and spouses, with a variety of tax situations, had as much disposable income while unemployed as they would have by accepting a job that paid 80-100 percent of their previous one. The number would have been less than one million under 2007 rules, and about nine million under a bigger stimulus. Tax obligations and foregone unemployment insurance about equally erode the rewards from retaining a job, or starting a new one.
Keywords: unemployment insurance; safety net programs; job acceptance penalties; fiscal stimulus
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 |
|---|---|
| Unemployment insurance (UI) and other safety net programs (J65) | job acceptance penalties (J68) |
| job acceptance penalties (J68) | financial rewards of working (J33) |
| American Recovery and Reinvestment Act (ARRA) (I23) | job acceptance penalties (J68) |
| job acceptance penalties (J68) | incentives to work (J33) |
| American Recovery and Reinvestment Act (ARRA) (I23) | financial rewards of returning to work (J32) |
| UI benefits and marginal tax rates (H31) | job acceptance penalties (J68) |