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The ARRA: Some Unpleasant Welfare Arithmetic

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  • Casey B. Mulligan

Abstract

Distributions of tax rates on job acceptance and layoff margins are estimated for unemployed household heads and spouses under three benefit and tax rule scenarios: actual rules under the American Reinvestment and Recovery Act, rules as they would have been if they had not been changed since 2007, and rules as they might have been with a bigger fiscal stimulus. Two or three million unemployed household heads and spouses, with a variety of tax situations, had as much disposable income while unemployed as they would have by accepting a job that paid 80-100 percent of their previous one. The number would have been less than one million under 2007 rules, and about nine million under a bigger stimulus. Tax obligations and foregone unemployment insurance about equally erode the rewards from retaining a job, or starting a new one.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18591.

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Date of creation: Dec 2012
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Handle: RePEc:nbr:nberwo:18591

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  1. Robert E. Hall & Paul R. Milgrom, 2007. "The Limited Influence of Unemployment on the Wage Bargain," Levine's Bibliography 321307000000000135, UCLA Department of Economics.
  2. Casey B. Mulligan & Trevor S. Gallen, 2013. "Wedges, Wages, and Productivity under the Affordable Care Act," NBER Working Papers 19771, National Bureau of Economic Research, Inc.
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  8. Yelowitz, Aaron S, 1995. "The Medicaid Notch, Labor Supply, and Welfare Participation: Evidence from Eligibility Expansions," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 909-39, November.
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  10. Richard V. Burkhauser & Sean Lyons & Kosali I. Simon, 2011. "The Importance of the Meaning and Measurement of “Affordable” in the Affordable Care Act," NBER Working Papers 17279, National Bureau of Economic Research, Inc.
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  12. Martin Feldstein & Andrew Samwick, 1992. "Social Security Rules and Marginal Tax Rates," NBER Working Papers 3962, National Bureau of Economic Research, Inc.
  13. Maag, Elaine & Steuerle, C. Eugene & Chakravarti, Ritadhi & Quakenbush, Caleb, 2012. "How Marginal Tax Rates Affect Families At Various Levels Of Poverty," National Tax Journal, National Tax Association, vol. 65(4), pages 759-82, December.
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  15. Raj Chetty, 2008. "Erratum: Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 1197-1197, December.
  16. Casey B. Mulligan, 2014. "The Economics of Work Schedules under the New Hours and Employment Taxes," NBER Working Papers 19936, National Bureau of Economic Research, Inc.
  17. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, issue Nov, pages 2-20.
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  1. ACA and EMTRs
    by Eric Crampton in Offsetting Behaviour on 2014-04-11 04:02:00
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Cited by:
  1. Casey B. Mulligan, 2014. "The Economics of Work Schedules under the New Hours and Employment Taxes," NBER Working Papers 19936, National Bureau of Economic Research, Inc.
  2. Casey B. Mulligan, 2013. "Uncertainty, Redistribution, and the Labor Market," NBER Working Papers 19553, National Bureau of Economic Research, Inc.

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