A nation’s prosperity is determined by the quantity and quality of labor and capital that are productively utilized.
Which means that it doesn’t make sense to have policies that penalize either saving and investment or working.
Yet that seems to be the favorite hobby of the political class.
And there are real consequences. A new study by a pair of economists, published by the National Bureau of Economic Research, has some interesting findings on the link between redistribution programs and labor supply.
It’s a bit wonky, given the way academics write, but they produce some important data on the negative unintended consequences of government dependency.
…we find that the decline in desire to work since the mid-90s lowered the unemployment rate by about 0.5 ppt and the participation rate by 1.75 ppt. This is a large effect… Our estimates imply that changes in the provision of welfare and social…
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