IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Who wins, who loses? Tools for distributional policy evaluation

Listed author(s):
  • Kasy, Maximilian

Most policy changes generate winners and losers. Political economy and optimal policy suggest questions such as: Who wins, who loses? How much? Given a choice of welfare weights, what is the impact of the policy change on social welfare? This paper proposes a framework to empirically answer such questions. The framework is grounded in welfare economics and allows for arbitrary heterogeneity across individuals as well as for endogenous prices and wages (general equilibrium effects). The proposed methods are based on imputation of money-metric welfare impacts for every individual in the data. The key technical contribution of this paper are new identification results for marginal causal effects conditional on a vector of endogenous outcomes. These identification results are required for imputation of individual welfare effects. Based on these identification results, we propose methods for estimation and inference on disaggregated welfare effects, sets of winners and losers, and social welfare effects. We furthermore provide results relating aggregation with social welfare weights to the distributional decomposition literature. %Our framework generalizes approaches used in the empirical optimal tax literature, the distributional decomposition literature, and the literature on determinants of the wage distribution. We apply our methods to analyze the distributional impact of the expansion of the Earned Income Tax Credit (EITC), using variation in state supplements to the federal EITC and the CPS-IPUMS data. We find large negative effects of depressed wages as a consequence of increased labor supply. The estimated effects are largest for earning around 20.000 US$ per year, and for high school dropouts.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Harvard University OpenScholar in its series Working Paper with number 143126.

in new window

Date of creation: Jan 2014
Handle: RePEc:qsh:wpaper:143126
Contact details of provider: Postal:
1737 Cambridge Street, Cambridge, MA 02138

Phone: 617-496-2450
Fax: 617-496-5149
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:qsh:wpaper:143126. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Brandon)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.