Max Mosley, 03 August 2021

Is the welfare state a drain on resources, or should policymakers reframe it as a targeted way to deliver fiscal stimulus in a crisis? Max Mosley argues that evidence from the UK’s targeted welfare payments shows there is a large multiplier effect when we target credit-constrained families.

You can read the paper discussed, The Importance of Being Earners: Modelling the Implications of Changes to Welfare Contributions on Macroeconomic Recovery by Max A. Mosley, in issue 82 of CEPR's Covid Economics Papers here

Olivier Coibion, Yuriy Gorodnichenko, Michael Weber, 08 September 2020

A major component of the 27 March CARES Act in the US was a one-time transfer to all qualifying adults of up to $1200, with $500 per additional child. Using a large-scale survey of US consumers, this column studies how these large transfers affected individuals' consumption, saving and labour supply decisions. Most respondents report that they primarily saved or paid down debts with their transfers, with only about 15% reporting that they mostly spent it. On average, individuals report having spent or planning to spend only around 40% of the total transfer. The payments appear to have had no meaningful effect on labour-supply decisions from these transfer payments, except for 20% of the unemployed who report that the stimulus payment made them search harder for a job.

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