Do Welfare Policies Matter for Labor Market Aggregates? Quantifying Safety Net Work Incentives since 2007

Casey Mulligan

No 18088, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: E24 H31 I38 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-mac
Note: EFG PE
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Citations: View citations in EconPapers (16)

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