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How CBO Estimated the Effects of the 2025 Reconciliation Act on the Labor Supply: Working Paper 2026-06

Author

Listed:
  • Lea Bart
  • Justin Falk
  • Shannon Mok

Abstract

Fiscal policies can affect incentives to work by changing the resources available to people who are not working and the compensation for an additional hour of work (after accounting for taxes paid and benefits received) for people who are working. How much labor people supply in response to the work incentives under current law is reflected in the economic projections that underlie the Congressional Budget Office's baseline projections of revenues and outlays.Provisions in Public Law 119-21, referred to here as the 2025 reconciliation act, affected

Suggested Citation

  • Lea Bart & Justin Falk & Shannon Mok, 2026. "How CBO Estimated the Effects of the 2025 Reconciliation Act on the Labor Supply: Working Paper 2026-06," Working Papers 62267, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:62267
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    File URL: https://www.cbo.gov/system/files/2026-06/62267-Labor-Supply.pdf
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    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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