Working Paper: NBER ID: w27693
Authors: Olivier Coibion; Yuriy Gorodnichenko; Michael Weber
Abstract: Using a large-scale survey of U.S. consumers, we study how the large one-time transfers to individuals from the CARES Act affected their consumption, saving and labor-supply decisions. Most respondents report that they primarily saved or paid down debts with their transfers, with only about 15 percent reporting that they mostly spent it. When providing a detailed breakdown of how they used their checks, individuals report having spent or planning to spend only around 40 percent of the total transfer on average. This relatively low rate of spending out of a one-time transfer is higher for those facing liquidity constraints, who are out of the labor force, who live in larger households, who are less educated and those who received smaller amounts. We find no meaningful effect on labor-supply decisions from these transfer payments, except for twenty percent of the unemployed who report that the stimulus payment made them search harder for a job.
Keywords: stimulus payments; CARES Act; consumer behavior; labor supply; COVID-19
JEL Codes: E2; E3; E6
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| CARES Act stimulus payments (H84) | consumption behavior (D10) |
| CARES Act stimulus payments (H84) | saving behavior (D14) |
| CARES Act stimulus payments (H84) | debt repayment (H63) |
| lower-income households (R20) | consumption behavior (D10) |
| liquidity constraints (E41) | consumption behavior (D10) |
| CARES Act stimulus payments (H84) | labor supply decisions (J22) |
| stimulus payment (J33) | job search effort (J68) |
| CARES Act stimulus payments (H84) | marginal propensity to consume (E21) |