Effects of Cash Transfers on the Labor Market in Damon Jones and Ioana Marinescu's Article

Effects of Cash Transfers on the Labor Market in Damon Jones and Ioana Marinescu's Article
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Summarize Assigned Economics Journal Article
Universal and permanent cash transfers play a role in determining the growth of a nation’s labor market. However, these changes might not be noticeable to the extent that they could cause major employment changes. “The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from The Alaska Permanent Fund” by Damon Jones and Ioana Marinescu presents the effects of cash transfers on the labor market. The article seeks to answer how universal and permanent cash transfers affect the labor market. The research question is important because the effect of cash transfers on labor markets is used in designing tax policies, designing public pension programs, and means-tested transfers (Jones & Marinescu, 2018).
Cash transfers are considered to discourage people from working due to an increase in income. Therefore, their impact on the labor market must be determined to ensure a nation makes the right policies. These policies ought to be designed in a way that will not largely affect the labor market. Studies have been carried out that indicate that an increase in unearned income will reduce earned income, harming the labor market. If organizations do not have enough workers, they will cut down production, affecting the availability of goods. Consumers will strive to buy the limited products, thus leading to an increase in prices. Such would result in equilibrium in the economy. Therefore, the research question seeks to facilitate the creation of an equilibrium.
The data used includes a literature review of the research question. The article outlines various studies to prove that universal cash transfers reduced earned income because it demotivates people from working. Another study on the Eastern Band of Cherokee Indians proved that cash transfers did not affect labor supply. The study also uses the Alaska Permanent Fund Dividend to determine the long-run impact of cash transfers. In this case, they aim to study the universal unconditioned cash transfer (Jones & Marinescu, 2018). The data involves the entire state of Alaska as a unit of observation and is collected from the Current Population Survey. Permutation methods are used to assess the statistical likelihood of the survey’s results. The extensive data collection method for the entire state instead of a small gr...