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

Authors

Brad J. Hershbein, W.E. Upjohn Institute for Employment ResearchFollow
Bryan A. Stuart, Federal Reserve Bank of PhiladelphiaFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-2534-8164

Series

Upjohn Institute working paper ; 22-362

**Published Version**

In Journal of Public Economics 224: 104923

DOI

10.17848/wp22-362

Issue Date

January 2022

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.

Sponsorship

We gratefully acknowledge funding from the 2018–2019 U.S. Dept. of Labor (DOL) Scholars Program (Contract # DOL-OPS-15-C-0060).

Subject Areas

ECONOMIC DEVELOPMENT; Local labor markets; Urban issues; UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS; Poverty and income support; Income support programs