Redistribution can boost demand but cut output, warns Fed working paper
Using redistribution to boost output will depend on how the labour force reacts
Wealth redistribution will only boost output in an economy so long as the effect from the boost in demand is not offset by a greater propensity among working class households to opt for greater amounts of leisure time, according to a working paper from the Richmond Fed.
In Does Redistribution Increase Output? The Centrality of Labor Supply, Kartik Athreya, Andrew Owens and Felipe Schwartzman note that the aftermath of the recent recession has seen numerous calls to use transfers to poorer
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