David Cesarini, Erik Lindqvist, Matthew Notowidigdo, Robert Östling, 24 January 2016

Cash welfare programmes are widely thought to discourage work because unearned income reduces the labour supply even when it does not alter work incentives. This column discusses recent evidence from Swedish lottery players suggesting that this ‘income effect’ is economically significant, but modest in magnitude and surprisingly similar across various demographic groups. Introducing ‘unconditional basic income’ programmes in developed countries may reduce the labour supply across a broad cross-section of the population.

Rudolfs Bems, Julian di Giovanni, 08 September 2014

Unconventional policy responses to the 2008-09 Crisis in Latvia and its subsequent recovery caught many economists by surprise. This column uses evidence from detailed product-level data to argue that income-induced expenditure switching from expensive imported to cheap domestic goods was an important contributor to the external adjustment. The conventional relative price channel played a small role.

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