Distributional Impact of the American Recovery and Reinvestment Act: A Microsimulation Approach

Levy Economics Institute Working Papers Series

36 Pages Posted: 18 Jun 2009

See all articles by Ajit Zacharias

Ajit Zacharias

Bard College - Levy Economics Institute

Thomas Masterson

Bard College - Levy Economics Institute

Kijong Kim

Levy Economics Institute of Bard College

Date Written: June 16, 2009

Abstract

Over the last two decades, those at the bottom of the income scale have seen their incomes stagnate, while those at the top have seen theirs skyrocket. Without intervention, the recession that began in December 2007 was likely to exacerbate this trend. Will the American Recovery and Reinvestment Act of 2009 (ARRA) be able to keep the situation from getting worse for those at the bottom of the income scale? Will ARRA reverse the upward trend in inequality that we have seen in the recent past? We employ a microsimulation of ARRA to address these questions. We find that, despite a large amount of job creation, ARRA is likely to have little impact on overall income inequality, or on the income gaps between relatively advantaged and disadvantaged groups.

Keywords: income distribution, inequality, job creation, American Recovery and Reinvestment Act, policy impacts

JEL Classification: D31, D63, E62

Suggested Citation

Zacharias, Ajit and Masterson, Thomas and Kim, Kijong, Distributional Impact of the American Recovery and Reinvestment Act: A Microsimulation Approach (June 16, 2009). Levy Economics Institute Working Papers Series, Available at SSRN: https://ssrn.com/abstract=1420776 or http://dx.doi.org/10.2139/ssrn.1420776

Ajit Zacharias (Contact Author)

Bard College - Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504
United States
845-758-7734 (Phone)
845-758-1149 (Fax)

HOME PAGE: http://www.levy.org

Thomas Masterson

Bard College - Levy Economics Institute ( email )

Blithewood Ave
Annandale-on-Hudson, NY 12504
United States
845-758-7700 (Phone)
845-758-1149 (Fax)

HOME PAGE: http://levy.org

Kijong Kim

Levy Economics Institute of Bard College ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States
8457587738 (Phone)
8457581149 (Fax)

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