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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.
Journal Article
Employment Effects of Pandemic Emergency Unemployment Benefits: Incentives Matter
The employment effects of halting programs that granted emergency unemployment benefits during the pandemic were substantial and differed across age groups.
Working Paper
Reservation Wages Revisited: Empirics with the Canonical Model
Using innovative longitudinal data from a survey of unemployment insurance (UI) recipients, we test several implications of a canonical job search model for reservation wages during unemployment spells. First, consistent with the model, we find that reservation wages fall faster when UI benefit durations are shorter. However, workers set their initial reservation wages higher, and adjust them slower, relative to model predictions. Second, workers' expectations—elicited at the beginning of their unemployment spell—about how their reservation wage will evolve if they remain unemployed are ...
Are Continued Jobless Claims a Useful Gauge of Labor Market Conditions?
Economists have used initial claims for jobless benefits to gauge U.S. labor market conditions. Can continued claims also be used as a predictor of employment growth?
Working Paper
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 ...
Working Paper
The Impact of Government Transfer Payment Frequency on Consumption: Evidence from Delayed UI
We study how the frequency of government transfer payments affects spending behavior. Our empirical approach uses transaction-level data on income and spending and exploits quasi-random delays in the receipt of unemployment insurance (UI) benefits. Spending drops by about half of the loss in income that occurs while individuals wait for UI benefits, revealing the value of periodic payments for liquidity-constrained individuals. Once delayed payments are received as lump sums, individuals reallocate spending toward less commonly purchased big-ticket categories that are dominated by durables. ...
Working Paper
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 ...
Discussion Paper
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 ...
Ending Pandemic Unemployment Benefits Linked to Job Growth
A new state-level analysis finds that ending emergency unemployment benefits had a statistically significant positive impact on employment.
Working Paper
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 ...