 Cost of policy choices: A microsimulation analysis of the impact on family welfare of unemployment and price changesJulie Hotchkiss, Robert Moore and Fernando Rios-Avila () Journal of Macroeconomics, 2020, vol. 63, issue C Abstract: This paper calculates the welfare cost to families of an unemployment shock. Using U.S. data, we find an average annualized expected dollar equivalent welfare loss of $1,156 when the unemployment rate rises by one-percentage point. Relative to single families, the welfare loss is greater for married families and increases with education. We also estimate that a loss in purchasing power of 1.8% generates the same amount of welfare loss as a one percentage point rise in the unemployment rate. Additionally, the magnitude of the shock to purchasing power that a family is willing to endure to avoid a one percentage point increases in the aggregate unemployment rate rises with income. The results in this paper informs policy makers about the distributional implications of decisions likely to affect labor markets. Keywords: Family welfare; Joint labor supply; Microsimulation; Dual mandate; Monetary policy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:63:y:2020:i:c:s0164070419300515 DOI: 10.1016/j.jmacro.2019.103167 Access Statistics for this article Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos More articles in Journal of Macroeconomics from Elsevier |
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