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Estimates of Costs for a U.S. Paycheck Guarantee

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  • Beinhocker, Eric

Abstract

The public health crisis caused by corona virus disease (COVID-19) has required social distancing measures that have resulted in drops in economic activity and employment not seen since the Great Depression. In response, several countries have introduced government guarantees of worker paychecks. This paper provides a simple analysis of the potential fiscal costs of introducing such a guarantee in the U.S. The analysis finds that a program providing a 100% paycheck guarantee for all non-public sector workers, capped at an annual salary of $100,000 and including healthcare benefits, would cost approximately $115.7 billion per month, or $347 billion for a 3-month program. The paper considers the sensitivity of this estimate to assumptions as well as alternative proposal scenarios. The paper concludes that the benefits of such a program in preserving employment are likely to far outweigh the fiscal costs.

Suggested Citation

  • Beinhocker, Eric, 2020. "Estimates of Costs for a U.S. Paycheck Guarantee," INET Oxford Working Papers 2020-07, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    • Handle: RePEc:amz:wpaper:2020-07
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    File URL: https://www.inet.ox.ac.uk/files/Paycheck-Guarantee-Costing-4-14-20-UPDATED.pdf
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    References listed on IDEAS

    as
    1. R Maria del Rio-Chanona & Penny Mealy & Anton Pichler & François Lafond & J Doyne Farmer, 2020. "Supply and demand shocks in the COVID-19 pandemic: an industry and occupation perspective," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 36(Supplemen), pages 94-137.
    2. R Maria del Rio-Chanona & Penny Mealy & Anton Pichler & François Lafond & J Doyne Farmer, 0. "Supply and demand shocks in the COVID-19 pandemic: an industry and occupation perspective," Oxford Review of Economic Policy, Oxford University Press, vol. 36(Supplemen), pages 94-137.
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    More about this item

    Keywords

    COVID-19; unemployment policy; paycheck guarantee; fiscal cost;
    All these keywords.

    JEL classification:

    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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