Working Paper

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

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 per capita earnings. However, these areas also experience persistent increases in per capita transfers, 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.

Keywords: recessions; safety net; government transfers;

JEL Classification: E32; H50; R12; R28;

https://doi.org/10.21799/frbp.wp.2022.08

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2022-03-22

Number: 22-08