When income effects are large: labor supply responses and the value of welfare transfers

Giupponi, Giulia (2019) When income effects are large: labor supply responses and the value of welfare transfers. CEP Discussion Papers (CEPDP1651). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

I estimate the long-run income effect of welfare transfers on individual labor supply. Using Italian administrative data on the universe of survivor insurance recipients, I implement a regression discontinuity design around a change in survivor insurance generosity based on the spouse's death date. I find that survivors fully offset the benefit loss with increases in earnings. Labor force participation and program substitution are the main margins of adjustment. I consider potential explanations for the large income effect. Evidence suggests that the value of additional income in the widowhood state is large, driving large participation responses to survivor benefit cuts.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2019 The Author
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J22 - Time Allocation and Labor Supply
Date Deposited:	16 Feb 2020 14:42
Last Modified:	11 Dec 2024 19:33
URI:	http://eprints.lse.ac.uk/id/eprint/103424

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