Publications Financial Security *Journal Article

Financially Stressed Families Save More with Medicaid, Study Shows

As the gig economy plays an increasingly important role in the labor market, there is a need to understand the economic factors that influence participation in this sector. In this paper, we investigate how saving the federal tax refund affects gig economy participation for low-income online tax filers in the six months following tax filing. Using longitudinal survey data merged with administrative tax records, we leverage random assignment in a unique refund savings experiment as an exogenous instrument for refund savings to estimate the average effects of saving the tax refund on participation in the gig economy. Although we find no effects of refund savings on gig economy participation for the full sample of low-income filers, we find significant heterogeneous effects of refund savings for households conditional on student status and having access to liquidity prior to tax refund receipt—findings consistent with both life cycle models and the limited literature on the antecedents of gig participation. Specifically, refund savings reduced the likelihood of low-income students working in the gig economy, but increased the likelihood of more economically vulnerable households—non-students with low-incomes and substantial liquidity constraints—to work in the gig economy. These findings hold when estimating the effects of refund savings on the rate of joining the gig economy, suggesting that at least part of this shift in labor supply is occurring at the extensive margin.

Project: Household Financial Survey (HFS)


Bufe, S., Roll, S. P., Kondratjeva, O., Hardy, B., & Grinstein-Weiss, M. (2019). Does Savings Affect Participation in the Gig Economy? Evidence from a Tax Refund Field Experiment (SPI Working Paper 19-1). St. Louis, MO: Washington University, Social Policy Institute.