Speaker: Dr Gianni La Cava

Affiliation: e61 Institute

Location: Room 207, Chamberlain Building (#35), St Lucia Campus

Zoom: https://uqz.zoom.us/j/89790507770

Abstract: This paper exploits a large and unprecedented increase in Australian unemployment benefits during the COVID-19 pandemic to study the consumption behaviour of low-income households. Using high-frequency bank transactions data, we estimate that recipients of the JobSeeker supplement spent over 65 cents of every additional dollar received within a month of payment, with nearly 40% spent on the first day. The response was strongest among liquidity-constrained households but remained substantial even for those with higher bank balances. Spending patterns followed predictable pay cycles, suggesting that mental accounting and habitual behaviour shape marginal propensities to spend alongside liquidity. By leveraging a triple-differences empirical design with Australian and New Zealand control groups, we isolate the causal effect of the supplement and demonstrate that targeted transfers can provide fast and effective fiscal stimulus. Our results contribute new evidence on the dynamics of spending responses to persistent income shocks and have implications for the design of redistributive policy.

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Venue

Chamberlain Building (#35), St Lucia Campus
Room: 
207