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Reflections on the Use of Economic Research in Government during the Great Recession. Alan B. Krueger Princeton University & NBER May 15, 2011. Examples of Policies. Health Care Reform Taxes Subsidies Lack of insurance Financial Regulatory Reform Insurance Capital TARP Autos Banks
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Reflections on the Use of Economic Research in Government during the Great Recession Alan B. Krueger Princeton University & NBER May 15, 2011
Examples of Policies Health Care Reform • Taxes • Subsidies • Lack of insurance Financial Regulatory Reform • Insurance • Capital TARP • Autos • Banks • Housing Need for Additional Stimulus Health of State and Local Gov’ts • Fiscal Drag • Build America Bonds Energy/Cap & Trade HIRE Act/NJTC Small Business Lending Fund Infrastructure Unemployment Insurance Budget/TROIKA Tax Policy • FTHBC • Bank Tax • Section 529 Accounts • Investment incentives Social Security/Medicare Disability Insurance Immigration GSEs
Survey Design • Start with universe of UI recipients in NJ in late September 2009 • Stratified random sample (n=6,025) • -- Strata consisted of duration of unemployment by email address on file • -- Over sampled long term unemployed and those with email addresses • NJ LWD sent letter inviting participation in early October 2009 • Web survey – questions on time use, job search, swb, reservation wage • consumption, disability insurance applications, etc. • Entry Survey (wealth, demographics, previous job) • -- Offered $20 for participation or $40 if wait 12 weeks (46% took latter) • 12 weekly surveys, starting w/ week of entry survey (s, wR, job offers, etc.) • -- Weekly reminders • Extended Survey: Additional 12 weeks of interviews for those with 60 weeks of unemployment to start in order to study effect of exhausting UI benefits
Subjective Well-Being • Happiness declines over spell of unemployment and sadness and stress rise. • Sadness rises twice as fast during episodes of job search.