Low-income earners exhibit higher marginal propensities to consume due to liquidity constraints
the verdict
SUPPORTED
the evidence backs this
confidence 88/100
Economic literature and empirical data consistently show that low-income earners have a higher marginal propensity to consume, largely driven by liquidity constraints and hand-to-mouth household dynamics.
Evidence for · 3
The Marginal Propensity to Consume in Heterogeneous Agent Models
2022 · cited by 110
Demonstrates through heterogeneous agent models that hand-to-mouth households with liquidity constraints drive high average marginal propensities to consume.
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More for · 2
Spending Effects of Child-Related Fiscal Transfers
2022 · cited by 0
Finds empirical evidence that spending effects from fiscal transfers are significantly higher for low-income and liquidity-constrained households.
Heterogeneity in the Spending Response to Stimulus: Evidence from the Pulse Survey
2023 · cited by 0
Shows that liquidity constraints bind poorer households during crises, leading them to exhibit a high propensity to spend stimulus payments.