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Do Unemployment Benefits Expirations Help Explain the Surge in Job Openings?
Job openings are arguably one of the most important indicators of recovery in the labor market, as they reflect employers? willingness to hire. The number of job openings has recovered steadily since the recession, yet through the end of 2013, the openings rate was still substantially below its pre-recession peak (see chart below). Starting in January 2014, however, the number of job openings increased dramatically, up by 20 percent through June 2014, and job openings relative to employment jumped back to the peak of the previous expansion. In this post, we argue that the expiration of the ...
The Jobs Effect of Ending Pandemic Unemployment Benefits: A State-Level Analysis
This note uses the asynchronous cessation of emergency unemployment benefits (EUB) in 2021 to investigate the jobs impact of ending unemployment benefits. While some states stopped providing EUB in September, other states stopped in June and July. Using the cessation month as an instrument, we estimate the causal effect on employment of reducing unemployment rolls. In the first three months following a state’s program termination, for every 100 person reduction in beneficiaries, state employment causally increased by about 35 persons. The effect is statistically different from zero and ...
Optimal unemployment insurance and cyclical fluctuations
The authors study the design of optimal unemployment insurance in an environment with moral hazard and cyclical fluctuations. The optimal unemployment insurance contract balances the insurance motive to provide consumption for the unemployed with the provision of incentives to search for a job. This balance is affected by aggregate conditions, as recessions are characterized by reductions in job finding rates. We show how benefits should vary with aggregate conditions in an optimal contract. In a special case of the model, the optimal contract can be solved in closed form. We show how this ...
Recent Extensions of U.S. Unemployment Benefits: Search Responses in Alternative Labor Market States
In response to the 2007-09 ?Great Recession,? the maximum duration of U.S. unemployment benefits was increased from the normal level of 26 weeks to an unprecedented 99 weeks. I estimate the impact of these extensions on job search, comparing them with the more limited extensions associated with the milder 2001 recession. The analyses rely on monthly matched microdata from the Current Population Survey. I find that a 10-week extension of UI benefits raises unemployment duration by about 1.5 weeks, with little variation across the two episodes. This estimate lies in the middle-to-upper end of ...
The End of Emergency Pandemic Unemployment Benefits in 2021
Although many saw the $300 weekly add-on as the key disincentive to work, the large drop in benefit recipients was driven primarily by the halt in other federal jobless programs.
Increasing Employment by Halting Pandemic Unemployment Benefits
In mid-2021, 26 states halted participation in all or some federal emergency unemployment benefits (EUB) programs before those programs' federal funding lapsed. This article uses this asynchronous EUB cessation between early- and late-halting states to estimate the causal impact of benefit cessation on employment. We find that cessation increased employment by 29 persons for every 100 (pre-halt) EUB recipients. Expressed as a number of jobs, if all states had halted EUB in June, September employment would have been 3.4 million persons higher relative to a no-halt counterfactual. Late-halting ...