![]() ![]() Source: The Wall Street Journal Quote of the week: Chart of the week: Retail sales dropped 1.9% in December While the additional child care burden caused by the pandemic did not appear to drive parents to exit the labor market, it disproportionately impacted vulnerable populations and exacerbated inequalities, the authors conclude. Individuals with less education (who tend to work in-person jobs and have lower pay) may have been less able to switch to remote work or arrange alternative child care arrangements, the authors suggest. The reductions in hours were similar for men and women but were much more pronounced for parents without a college degree. Using data from the Current Population Survey and county-level data on school closures, the authors find that, when schools were closed, the mothers and fathers worked 1.5 to 2 fewer hours each week and were less likely to work full-time than those without school-age children. Kairon Shayne Garcia and Benjamin Cowan of Washington State University find that pandemic-induced school closures had little impact on whether parents of young children worked at all but did reduce the number of hours they worked. administrative capacity prior to the next pandemic or other largescale economic emergency would enable greatly improved targeting of either employment subsidies or business liquidity when the need arises again.” Parents of young children worked fewer hours due to COVID-19 school closures “A key takeaway from the PPP experience is that building U.S. Autor and co-authors argue that the PPP’s lack of targeting towards struggling businesses was necessary to distribute funds rapidly given the lack of administrative infrastructure for determining need. As a consequence, about three-quarters of PPP benefits went to households in the top fifth of the income distribution, in contrast to the more equally distributed benefits of the stimulus checks and expanded unemployment insurance. ![]() At most a third of this spending went to workers who would have otherwise lost their jobs 66% to 77% of the money instead accrued in the form of windfalls to business owners and shareholders who would have been able to maintain employment in the absence of PPP. The authors conclude that compared to other periods of economic distress, “the pandemic limited the types of goods and services that one could spend on and many households reduced spending.” PPP dollars mostly accrued to higher income households, reflecting the program’s lack of targetingĭavid Autor of MIT and co-authors estimate that Paycheck Protection Program (PPP) loans issued in 2020 saved about 3 million job-years of employment after the start of the pandemic, at an average cost of $169,000 per job-year. Moreover, households that self-reported mostly using their checks for expenses spent 14.3% of their stimulus checks. However, they find significant variation in spending across households: those in the bottom third of the distribution of liquid wealth – households with less than $3,000 in liquid wealth – spent 20% to 30% of their stimulus checks three months after their receipt. They estimate that people spent 10% of their stimulus checks on non-durable goods and services three months after receiving them with little evidence of additional spending in the subsequent three months or on durable goods. and co-authors find that people spent less of their checks than estimated by previous studies using other data sources and than in previous episodes. Using data from the Consumer Expenditure Survey on the variation in amount, receipt, and timing of receipt of stimulus checks authorized by the CARES Act, Jonathan A. Households spent less money from stimulus checks than previously estimated Want to receive the Hutchins Roundup as an email? Sign up here to get it in your inbox every Thursday. What’s the latest thinking in fiscal and monetary policy? The Hutchins Roundup keeps you informed of the latest research, charts, and speeches. ![]()
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