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

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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.

Suggested Citation

  • Brad Hershbein & Bryan Stuart, 2022. "Place-Based Consequences of Person-Based Transfer: Evidence from Recessions," Working Papers 22-08, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:93859
    DOI: 10.21799/frbp.wp.2022.08
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    More about this item

    Keywords

    recessions; safety net; government transfers;
    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

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