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DTSTART:20070311T020000
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DTSTAMP:20230925T100437
DTSTART;TZID=America/Detroit:20230927T160000
DTEND;TZID=America/Detroit:20230927T172000
SUMMARY:Workshop / Seminar:Benefits Cliffs in the Aggregate: Consequences for Welfare and Business Cycles
DESCRIPTION:Benefits cliffs - sudden decreases in public benefits that may occur with a small increase in earnings - may inhibit upward mobility. I study the effect of a multitude of cliffs across the universe of benefit programs in nine southern US states on intensive-margin labor supply and the implications for aggregate fluctuations. Using the American Community Survey and proprietary data from the Georgia Center for Opportunity covering nine southern US states\, I leverage geographic and household-structure variation to find that\, in aggregate\, individuals in households approaching benefits cliffs reduce their working hours by about 40 hours annually. I then build a dynamic stochastic general equilibrium model that matches this result\, where a key assumption of inframarginal households allows me to accurately capture the benefits cliffs of the US tax and transfer system. I find the aggregate implications of benefits cliffs on output are small\, but welfare gains from their elimination are large and concentrated. In a counterfactual model that smooths over benefit cliffs\, output increases about 1.6% more on impact in response to an aggregate productivity shock compared to the baseline model with benefits cliffs\, but the welfare gain to formally-constrained households doubles.
UID:113006-21829875@events.umich.edu
URL:https://events.umich.edu/event/113006
CLASS:PUBLIC
STATUS:CONFIRMED
CATEGORIES:Economics,Macroeconomics,seminar
LOCATION:Lorch Hall - 201
CONTACT:
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