Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/253576 
Year of Publication: 
2021
Citation: 
[Journal:] Quantitative Economics [ISSN:] 1759-7331 [Volume:] 12 [Issue:] 1 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2021 [Pages:] 217-249
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
This paper studies the savings and employment effects of the asset means-test in US income support programs using a structural life-cycle model with productivity, disability, and unemployment risk. An asset means-test incentivizes low-income households to hold few financial assets making them vulnerable to predictable and unpredictable income changes. Moreover, it incentivizes relatively productive households that happen to have few financial assets to leave the labor force. However, it allows for relative generous transfers to households in most need. Moreover, it counteracts relatively productive households leaving the labor force after the age of 50. In terms of the welfare of an unborn household, the asset means-test that optimally trades off these effects is $150,000, and abolishing it is close to optimal.
Subjects: 
incomplete markets
Means-tested programs
public insurance
JEL: 
D91
I38
J26
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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