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This paper calculates the change in optimal labor supply and total family welfare resulting from the Tax Cuts and Jobs Act of 2017 (TCJA). We estimate labor supply elasticities for married families in the Current Population Survey from 2015 to 2017, using a joint family utility model. These elasticities are then used to simulate changes in optimal labor supply and resulting change in welfare among families with different characteristics under the new TCJA tax code. We find that optimal hours are lower post-TCJA, relative to before. However, there are differences across family members and family types. Both men's and women's optimal hours decline with income starting in the second quintile, but the decline is more dramatic for men. Overall, all families' welfare increased post-TCJA, with the gains in welfare disproportionately benefiting the wealthy; families with any self-employment income; families with children; and families renting, versus owning, their home.

This paper calculates the cost of an unemployment shock in terms of family welfare for married and single families separately and by education level. We find that, overall, families face an average annualized expected dollar equivalent welfare loss of $1,156 when the unemployment rate rises by 1 percentage point. The average welfare loss for married families is greater than the average loss for single families and increases in education. We then estimate that a price level increase of 1.8 percent generates the same amount of welfare loss. We also find that the average welfare loss from a shock to prices versus a shock to unemployment rises with income.

The female/male average wage ratio has steadily risen from 1983 to 2012. In earlier work, we found that the falling wage gap from 1983 to 1993 was materially detrimental to the average dual-earner family. The female/male wage ratio continued to rise over the following two decades, accompanied by a growing share of households in which the wife is the principal household income generator. This paper investigates how these two developments affected family welfare. Although family welfare rose during the 1990s, the story of the 2000s is quite different.

The analysis in this paper provides estimates of family welfare losses generated by wage and nonlabor income declines experienced across the Great Recession and by labor market constraints existing postrecession. Welfare losses are greater as families (both married and single) move up the income distribution. Total static welfare losses are estimated to amount to roughly $190 billion, comparing family welfare between 2007 and 2011.

We assess the 2001 income tax reform to determine its welfare impact across families with different characteristics. A household labor supply model is estimated to account for variable behavioral responses by family type. We find that while higher-education families received a larger share of the welfare gain generated from lower marginal tax rates, it was the lower-education families that provided the bulk of the additional labor supply motivated by the tax reform. We also find differing welfare gains across families with different numbers of children, highlighting the importance of allowing responses to vary across family characteristics when assessing the welfare impact of a policy change.