Redistribution, or subsidies and regulations intended to help the poor, unemployed, and financially distressed, have changed in many ways since the onset of the recent financial crisis. The unemployed, for instance, can collect benefits longer and can receive bonuses, health subsidies, and tax deductions, and millions more people have became eligible for food stamps.Economist Casey B. Mulligan argues that while many of these changes were intended to help people endure economic events and boost the economy, they had the unintended consequence of deepening-if not causing-the recession. By dulling incentives for people to maintain their own living standards, redistribution created employment losses according to age, skill, and family composition. Mulligan explains how elevated tax rates and binding minimum-wage laws reduced labor usage, consumption, and investment, and how they increased labor productivity. He points to entire industries that slashed payrolls while experiencing little or no decline in production or revenue, documenting the disconnect between employment and production that occurred during the recession. The book provides an authoritative, comprehensive economic analysis of the marginal tax rates implicit in public and private sector subsidy programs, and uses quantitative measures of incentives to work and their changes over time since 2007 to illustrate production and employment patterns. It reveals the startling amount of work incentives eroded by the labyrinth of new and existing social safety net program rules, and, using prior results from labor economics and public finance, estimates that the labor market contracted two to three times more than it would have if redistribution policies had remained constant.In The Redistribution Recession, Casey B. Mulligan offers hard evidence to contradict the notion that work incentives suddenly stop mattering during a recession or when interest rates approach zero, and offers groundbreaking interpretations and precise explanations of the interplay between unemployment and financial markets.

PrefaceChapter 1 IntroductionChapter 2 The Rise of Labor ProductivityQuarterly Indicators of Aggregate Economic QuantitiesMovements Along an Aggregate Marginal Productivity ScheduleOn Average, Real Wages did not FallWas It Customer Demand? Factor Reduction and Factor Substitution by IndustryNeither Wealth Effects nor Intertemporal Substitution Effects Explain the ?Supply? ShiftLabor Market Distortions since 2007Conclusion: Productivity Patterns Begin to Reveal the Recession's CausesAppendix 2.1: Productivity, Labor, and Residuals in Prior DownturnsAppendix 2.2: Sensitivity AnalysisChapter 3 The Expanding Social Safety NetA Framework for Quantifying the Generosity of the Safety Net as a WholeLegislation Made the Safety Net Available to Millions MoreLegislation Increased the Amount of Benefits Received per Program ParticipantMost of the Increase in Government Safety Net Expenditure is the Direct Result of Program Rule ChangesSafety Net Rule Changes and Assistance for the UnemployedMeans-tested Loan ForgivenessConclusion: Replacement Rates for Aggregate AnalysisAppendix 3.1: Calculation and Aggregation of Statutory Eligibility and Benefit IndicesAppendix 3.2: Sensitivity AnalysisAppendix 3.3: The Self-Reliance Rate OutlookAppendix 3.4: The Making Work Pay Tax CreditChapter 4 Supply and Demand: Labor Market Consequences of Safety Net ExpansionsThe Income-Maximization FallacyLabor and Output Effects of Safety Net ExpansionsPredictions for Consumption and InvestmentCalibrating the Wage Elasticity of Aggregate Labor SupplyConclusions and InterpretationAppendix 4.1: Comparative Advantage with Heterogeneous Effects of the Safety Net ExpansionsAppendix 4.2: Calibrating the Supply Elasticity from Unemployment Duration StudiesAppendix 4.3: Safety Net Distortions Measured in Dollars per YearChapter 5 Means-Tested Subsidies and Economic Dynamics since 2007The Neoclassical Growth Model with Targeted Means-Tested SubsidiesData and Simulation ResultsEffects of the Safety Net ExpansionInterpreting the Residual Labor Market DistortionsAn Investment Distortion by Itself does not Fit Actual BehaviorConclusionsAppendix 5.1: Calibration, Simulation, and Additional Sensitivity AnalysisChapter 6 Cross-Sectional Patterns of Employment and Hours ChangesCross-sectional Patterns of Self-Reliance Rate ChangesWork Hours Changes by Demographic Group and RegionProgram Participation Changes by Demographic GroupConclusion: The Cross-Sectional Patterns of Employment and Hours Changes are as Expected from a Large Safety Net ExpansionAppendix: Summary Statistics and Additional ResultsChapter 7 Keynesian and Other Models of Safety Net StimulusThe Safety Net and Consumer SpendingTransfers and Government Purchases are not the SameLabor Market Slack and the Marginal Effects of SupplySticky Prices, the Wage Elasticity of Labor Demand, and the Zero Lower BoundAn Econometric Model that Nests My Approach with the Slack Market and Sticky Price HypothesesConclusion: Whether Labor Supply Matters More, or Less, during a Recession is an Empirical QuestionAppendix: The Safety Net, Sticky Prices, and Monetary PolicyChapter 8 Recession-Era Effects of Factor Supply and Demand: Evidence from the Seasonal Cycle, the Construction Market, and Minimum Wage HikesThe Christmas and the Academic Seasons as Demand and Supply ShiftsChristmas Demand in Recessions and BoomsThe Summer Seasonal for Employment and UnemploymentHousing Investment Crowds Out Non-Residential ConstructionThe Employment Effects of Recent Minimum Wage Hikes Were No Less than BeforeThe Federal Minimum Wage Hikes Likely Reduced National Employment by Hundreds of Thousands, Especially Among the Young and UnskilledConclusion: Labor Supply Still Matters, About as Much as It Did in the PastChapter 9 Incentives and Compliance under the Federal Mortgage Modification GuidelinesThe Budget Set of a Borrower Facing the FDIC-HAMP Modification GuidelinesBorrower Reactions under Full Information and Full Compliance: Spend More and Work LessLender Incentives to Expand Modification CapacityConclusionsAppendix 9.1: Principal Modifications and the Eligible Income RangeAppendix 9.2: Marginal Tax Rates with Various Horizons and Discount RatesChapter 10 Uncertainty, Redistribution, and the Labor MarketA Model of the Equity-Efficiency TradeoffPossible Changes in the Equity-Efficiency Tradeoff, and the Optimal Degree of Social InsuranceThe Cost-Benefit Analysis of Safety Net Expansions: Necessary IngredientsConclusionsChapter 11 ConclusionsIncentives MatterWas the Financial Collapse a Cause, or Effect?Labor Supply and Demand Help Explain an Unhappy SituationBibliography