This paper studies labor supply responses to transitory income, exploiting the differential timing of the 2008 tax rebates. While an influential literature finds that rebates encourage consumer spending, it has ignored the ramifications on labor supply. I estimate that each rebate dollar reduces monthly earnings by 9 cents with smaller but significant lagged effects. This responsiveness is primarily concentrated in the second quartile of the earnings distribution and among hourly workers. The results imply that the $96 billion in stimulus payments had a partial equilibrium effect of reducing short-term national labor earnings by more than $26 billion.

This paper proposes a method to estimate unconditional quantile treatment effects (QTEs) given one or more treatment variables, which may be discrete or continuous, even when it is necessary to condition on covariates. The estimator, generalized quantile regression (GQR), is developed in an instrumental variable framework for generality to permit estimation of unconditional QTEs for endogenous policy variables, but it is also applicable in the conditionally exogenous case. The framework includes simultaneous equations models with nonadditive disturbances, which are functions of both unobserved and observed factors. Quantile regression and instrumental variable quantile regression are special cases of GQR and available in this framework.