IDEAS home Printed from https://ideas.repec.org/p/upj/weupjo/22-362.html
   My bibliography  Save this paper

Place-Based Consequences of Person-Based Transfers: Evidence from Recessions

Author

Listed:
  • Brad J. Hershbein

    (W.E. Upjohn Institute for Employment Research)

  • Bryan A. Stuart

    (Federal Reserve Bank of Philadelphia)

Abstract

This paper studies how government transfers respond to changes in local economic activity that emerge during recessions. Local labor markets that experience greater employment losses during recessions face persistent relative decreases in earnings per capita. However, these areas also experience persistent increases in transfers per capita, which offset 16 percent of the earnings loss on average. The increase in transfers is driven by unemployment insurance in the short run, and medical, retirement, and disability transfers in the long run. Our results show that nominally place-neutral transfer programs redistribute considerable sums of money to places with depressed economic conditions.

Suggested Citation

  • Brad J. Hershbein & Bryan A. Stuart, 2022. "Place-Based Consequences of Person-Based Transfers: Evidence from Recessions," Upjohn Working Papers 22-362, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:22-362
    as

    Download full text from publisher

    File URL: https://research.upjohn.org/cgi/viewcontent.cgi?article=1381&context=up_workingpapers
    Download Restriction: This material is copyrighted. Permission is required to reproduce any or all parts.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bryan A. Stuart, 2022. "The Long-Run Effects of Recessions on Education and Income," American Economic Journal: Applied Economics, American Economic Association, vol. 14(1), pages 42-74, January.
    2. Marianne Bitler & Hilary Hoynes & Elira Kuka, 2017. "Child Poverty, the Great Recession, and the Social Safety Net in the United States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 36(2), pages 358-389, March.
    3. Jeffrey Clemens & Philip G. Hoxie & Stan Veuger, 2022. "Was Pandemic Fiscal Relief Effective Fiscal Stimulus? Evidence from Aid to State and Local Governments," NBER Working Papers 30168, National Bureau of Economic Research, Inc.
    4. Pablo D Fajgelbaum & Cecile Gaubert, 2020. "Optimal Spatial Policies, Geography, and Sorting [“Theories of Systems of Cities,”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 959-1036.
    5. Gabriel Chodorow-Reich, 2019. "Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned?," American Economic Journal: Economic Policy, American Economic Association, vol. 11(2), pages 1-34, May.
    6. Campbell, John Y. & Cocco, Joao F., 2007. "How do house prices affect consumption? Evidence from micro data," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 591-621, April.
    7. Brad Hershbein & Bryan A. Stuart, 2024. "The Evolution of Local Labor Markets after Recessions," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 399-435, July.
    8. David H. Autor & Mark G. Duggan, 2003. "The Rise in the Disability Rolls and the Decline in Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 157-206.
    9. Atif Mian & Kamalesh Rao & Amir Sufi, 2013. "Household Balance Sheets, Consumption, and the Economic Slump," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(4), pages 1687-1726.
    10. Danny Yagan, 2019. "Employment Hysteresis from the Great Recession," Journal of Political Economy, University of Chicago Press, vol. 127(5), pages 2505-2558.
    11. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle.
    12. David Autor & David Dorn & Gordon Hanson, 2021. "On the Persistence of the China Shock," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 52(2 (Fall)), pages 381-476.
    13. Valerie A. Ramey, 2019. "Ten Years after the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 89-114, Spring.
    14. Clemens, Jeffrey & Veuger, Stan, 2021. "Politics and the distribution of federal funds: Evidence from federal legislation in response to COVID-19," Journal of Public Economics, Elsevier, vol. 204(C).
    15. Benjamin Austin & Edward Glaeser & Lawrence Summers, 2018. "Jobs for the Heartland: Place-Based Policies in 21st-Century America," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(1 (Spring), pages 151-255.
    16. Xavier Gabaix, 2011. "The Granular Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 79(3), pages 733-772, May.
    17. Timothy J. Bartik, 2015. "How Effects of Local Labor Demand Shocks Vary with the Initial Local Unemployment Rate," Growth and Change, Wiley Blackwell, vol. 46(4), pages 529-557, December.
    18. Tatyana Deryugina, 2017. "The Fiscal Cost of Hurricanes: Disaster Aid versus Social Insurance," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 168-198, August.
    19. Robert A. Moffitt, 2013. "The Great Recession and the Social Safety Net," The ANNALS of the American Academy of Political and Social Science, , vol. 650(1), pages 143-166, November.
    20. Kerwin Kofi Charles & Yiming Li & Melvin Stephens, 2018. "Disability Benefit Take-Up and Local Labor Market Conditions," The Review of Economics and Statistics, MIT Press, vol. 100(3), pages 416-423, July.
    21. Fatih Karahan & Benjamin Pugsley & Ayşegül Şahin, 2024. "Demographic Origins of the Start-up Deficit," American Economic Review, American Economic Association, vol. 114(7), pages 1986-2023, July.
    22. Adam M Guren & Alisdair McKay & Emi Nakamura & Jón Steinsson, 2021. "Housing Wealth Effects: The Long View," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(2), pages 669-707.
    23. Marianne Bitler & Hilary Hoynes & Elira Kuka, 2017. "Do In-Work Tax Credits Serve as a Safety Net?," Journal of Human Resources, University of Wisconsin Press, vol. 52(2), pages 319-350.
    24. Marianne Bitler & Hilary Hoynes, 2016. "The More Things Change, the More They Stay the Same? The Safety Net and Poverty in the Great Recession," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 403-444.
    25. David H. Autor & David Dorn & Gordon H. Hanson & Jae Song, 2014. "Trade Adjustment: Worker-Level Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1799-1860.
    26. Matias Busso & Jesse Gregory & Patrick Kline, 2013. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," American Economic Review, American Economic Association, vol. 103(2), pages 897-947, April.
    27. Nicole Maestas & Kathleen J. Mullen & David Powell, 2023. "The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 306-332, April.
    28. Cecile Gaubert & Patrick M. Kline & Damián Vergara & Danny Yagan, 2021. "Place-Based Redistribution," NBER Working Papers 28337, National Bureau of Economic Research, Inc.
    29. Juan Serrato & Philippe Wingender, 2016. "Estimating Local Fiscal Multipliers," Working Papers id:11109, eSocialSciences.
    30. Black, Dan A. & McKinnish, Terra G. & Sanders, Seth G., 2003. "Does the availability of high-wage jobs for low-skilled men affect welfare expenditures? Evidence from shocks to the steel and coal industries," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1921-1942, September.
    31. Peter Temin, 1998. "Causes of American business cycles: an essay in economic historiography," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 42(Jun), pages 37-64.
    32. Steven Pennings, 2021. "Cross-Region Transfer Multipliers in a Monetary Union: Evidence from Social Security and Stimulus Payments," American Economic Review, American Economic Association, vol. 111(5), pages 1689-1719, May.
    33. Dan Black & Kermit Daniel & Seth Sanders, 2002. "The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust," American Economic Review, American Economic Association, vol. 92(1), pages 27-50, March.
    34. Maestas, Nicole & Mullen, Kathleen J. & Strand, Alexander, 2021. "The effect of economic conditions on the disability insurance program: Evidence from the great recession," Journal of Public Economics, Elsevier, vol. 199(C).
    35. Edward L. Glaeser & Kristina Tobio, 2008. "The Rise of the Sunbelt," Southern Economic Journal, John Wiley & Sons, vol. 74(3), pages 609-643, January.
    36. Hilary Hoynes & Douglas L. Miller & Jessamyn Schaller, 2012. "Who Suffers during Recessions?," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 27-48, Summer.
    37. Matthew J. Notowidigdo, 2020. "The Incidence of Local Labor Demand Shocks," Journal of Labor Economics, University of Chicago Press, vol. 38(3), pages 687-725.
    38. Ben Sprung-Keyser & Nathaniel Hendren & Sonya Porter, 2022. "The Radius of Economic Opportunity: Evidence from Migration and Local Labor Markets," Working Papers 22-27, Center for Economic Studies, U.S. Census Bureau.
    39. Chloe N. East & David Simon, 2020. "How Well Insured are Job Losers? Efficacy of the Public Safety Net," NBER Working Papers 28218, National Bureau of Economic Research, Inc.
    40. Nicole Maestas & Kathleen J. Mullen & David Powell, 2016. "The Effect of Population Aging on Economic Growth, the Labor Force and Productivity," NBER Working Papers 22452, National Bureau of Economic Research, Inc.
    41. Bound, John & Holzer, Harry J, 2000. "Demand Shifts, Population Adjustments, and Labor Market Outcomes during the 1980s," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 20-54, January.
    42. Edward L. Glaeser & Kristina Tobio, 2008. "The Rise of the Sunbelt," Southern Economic Journal, John Wiley & Sons, vol. 74(3), pages 610-643, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brad Hershbein & Bryan A. Stuart, 2024. "The Evolution of Local Labor Markets after Recessions," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 399-435, July.
    2. David Autor & David Dorn & Gordon Hanson, 2021. "On the Persistence of the China Shock," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 52(2 (Fall)), pages 381-476.
    3. Andersen, Asbjørn Goul & Markussen, Simen & Røed, Knut, 2019. "Local labor demand and participation in social insurance programs," Labour Economics, Elsevier, vol. 61(C).
    4. Campos-Vazquez, Raymundo M. & Esquivel, Gerardo & Ghosh, Priyasmita & Medina-Cortina, Eduardo, 2023. "Long-lasting effects of a depressed labor market: Evidence from Mexico after the great recession," Labour Economics, Elsevier, vol. 81(C).
    5. Park, Sujeong & Powell, David, 2021. "Is the rise in illicit opioids affecting labor supply and disability claiming rates?," Journal of Health Economics, Elsevier, vol. 76(C).
    6. Michael Amior & Alan Manning, 2018. "The Persistence of Local Joblessness," American Economic Review, American Economic Association, vol. 108(7), pages 1942-1970, July.
    7. Mike Zabek, 2024. "Local Ties in Spatial Equilibrium," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(2), pages 287-317, April.
    8. Yagan, Danny, 2016. "The Enduring Employment Impact of Your Great Recession Location," Institute for Research on Labor and Employment, Working Paper Series qt12d0w9bs, Institute of Industrial Relations, UC Berkeley.
    9. Benjamin Austin & Edward Glaeser & Lawrence Summers, 2018. "Jobs for the Heartland: Place-Based Policies in 21st-Century America," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(1 (Spring), pages 151-255.
    10. Ning Jia & Raven Molloy & Christopher Smith & Abigail Wozniak, 2023. "The Economics of Internal Migration: Advances and Policy Questions," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 144-180, March.
    11. Brad J. Hershbein & Bryan A. Stuart, 2020. "Recessions and Local Labor Market Hysteresis," Upjohn Working Papers 20-325, W.E. Upjohn Institute for Employment Research.
    12. Thomas Gemert & Lenard Lieb & Tania Treibich, 2022. "Local fiscal multipliers of different government spending categories," Empirical Economics, Springer, vol. 63(5), pages 2551-2575, November.
    13. Yu, Chan, 2023. "The role of immigrants in the United States labor market and Chinese import competition," Journal of International Economics, Elsevier, vol. 144(C).
    14. Maestas, Nicole & Mullen, Kathleen J. & Strand, Alexander, 2021. "The effect of economic conditions on the disability insurance program: Evidence from the great recession," Journal of Public Economics, Elsevier, vol. 199(C).
    15. Gopi Shah Goda & Emilie Jackson & Lauren Hersch Nicholas & Sarah See Stith, 2023. "The impact of Covid-19 on older workers’ employment and Social Security spillovers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(2), pages 813-846, April.
    16. Ferdinando Monte & Stephen J. Redding & Esteban Rossi-Hansberg, 2018. "Commuting, Migration, and Local Employment Elasticities," American Economic Review, American Economic Association, vol. 108(12), pages 3855-3890, December.
    17. Brian C. Cadena & Brian K. Kovak, 2016. "Immigrants Equilibrate Local Labor Markets: Evidence from the Great Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 257-290, January.
    18. Tatyana Deryugina, 2017. "The Fiscal Cost of Hurricanes: Disaster Aid versus Social Insurance," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 168-198, August.
    19. Imai, Masami, 2022. "Local economic impacts of legislative malapportionment," Journal of Urban Economics, Elsevier, vol. 131(C).
    20. aus dem Moore, Jan Peter & Spitz-Oener, Alexandra, 2012. "Bye bye, GI: The impact of the US military drawdown on local German labor markets," SFB 649 Discussion Papers 2012-024, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.

    More about this item

    Keywords

    recessions; safety net; government transfers; demand shocks; local labor markets; event study;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:upj:weupjo:22-362. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/upjohus.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.