The Long-term Effects of Unemployment Insurance Extensions on Employment
The Long-term Effects of Unemployment Insurance Extensions on Employment

Author: Johannes F. Schmieder

Publisher:

Published: 2012

Total Pages: 8

ISBN-13:

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The majority of papers analyzing the employment effects of unemployment insurance (UI) benefit durations focuses on the duration of the first unemployment spell. In this paper, we make two contributions. First, we use a regression discontinuity design to analyze the long-term effects of extensions in UI durations. These estimates differ from standard estimates that they incorporate differences in UI benefit receipt and employment due to recurrent unemployment spells. Second, we derive a welfare formula of UI extensions that incorporates recurrent nonemployment spells. We find that accounting for nonemployment beyond the initial spell leads to a significant reduction in estimates of the nonemployment effect of UI extensions by about 25 percent. We show this effect is only partly explained by a mechanical effect due to finite follow-up durations, and mainly arises from a lower probability of days in nonemployment in months after end of the initial nonemployment spell.

Supply and Demand Effects of Unemployment Insurance Benefit Extensions: Evidence from U.S. Counties
Supply and Demand Effects of Unemployment Insurance Benefit Extensions: Evidence from U.S. Counties

Author: Klaus-Peter Hellwig

Publisher: International Monetary Fund

Published: 2021-03-12

Total Pages: 35

ISBN-13: 1513572687

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I use three decades of county-level data to estimate the effects of federal unemployment benefit extensions on economic activity. To overcome the reverse causality coming from the fact that benefit extensions are a function of state unemployment rates, I only use the within-state variation in outcomes to identify treatment effects. Identification rests on a differences-in-differences approach which exploits heterogeneity in county exposure to policy changes. To distinguish demand and supply-side channels, I estimate the model separately for tradable and non-tradable sectors. Finally I use benefit extensions as an instrument to estimate local fiscal multipliers of unemployment benefit transfers. I find (i) that the overall impact of benefit extensions on activity is positive, pointing to strong demand effects; (ii) that, even in tradable sectors, there are no negative supply-side effects from work disincentives; and (iii) a fiscal multiplier estimate of 1.92, similar to estimates in the literature for other types of spending.

Do Extended Unemployment Benefits Lengthen Unemployment Spells?
Do Extended Unemployment Benefits Lengthen Unemployment Spells?

Author: Henry S. Farber

Publisher:

Published: 2013

Total Pages: 41

ISBN-13:

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In response to the Great Recession, the availability of unemployment insurance (UI) benefits was extended to an unprecedented 99 weeks in many U.S. states in the 2009-2012 period. We use matched monthly data from the CPS to exploit variation in the timing and size of the UI benefit extensions across states to estimate the overall impact of these extensions on individual exit from unemployment, and we compare the estimated impact with that for the prior extension of benefits during the much milder downturn in the early 2000s. In both periods, we find a small but statistically significant reduction in the unemployment exit rate and a small increase in the expected duration of unemployment. The effects on exits and duration are primarily due to a reduction in exits from the labor force rather than to a decrease in exits to employment (the job finding rate). Although the overall effect of UI extensions on exit from unemployment is small, it implies a substantial effect of extended benefits on the steady-state share of unemployment in the cross-section that is long-term.

Unemployment Insurance Reform
Unemployment Insurance Reform

Author: David E. Balducchi

Publisher: W.E. Upjohn Institute

Published: 2018-09-11

Total Pages: 247

ISBN-13: 0880996528

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The Unemployment Insurance (UI) system is a lasting piece of the Social Security Act which was enacted in 1935. But like most things that are over 80 years old, it occasionally needs maintenance to keep it operating smoothly while keeping up with the changing demands placed upon it. However, the UI system has been ignored by policymakers for decades and, say the authors, it is broken, out of date, and badly in need of repair. Stephen A. Wandner pulls together a group of UI researchers, each with decades of experience, who describe the weaknesses in the current system and propose policy reforms that they say would modernize the system and prepare us for the next recession.

Optimal Unemployment Insurance
Optimal Unemployment Insurance

Author: Andreas Pollak

Publisher: Mohr Siebeck

Published: 2007

Total Pages: 204

ISBN-13: 9783161493041

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Designing a good unemployment insurance scheme is a delicate matter. In a system with no or little insurance, households may be subject to a high income risk, whereas excessively generous unemployment insurance systems are known to lead to high unemployment rates and are costly both from a fiscal perspective and for society as a whole. Andreas Pollak investigates what an optimal unemployment insurance system would look like, i.e. a system that constitutes the best possible compromise between income security and incentives to work. Using theoretical economic models and complex numerical simulations, he studies the effects of benefit levels and payment durations on unemployment and welfare. As the models allow for considerable heterogeneity of households, including a history-dependent labor productivity, it is possible to analyze how certain policies affect individuals in a specific age, wealth or skill group. The most important aspect of an unemployment insurance system turns out to be the benefits paid to the long-term unemployed. If this parameter is chosen too high, a large number of households may get caught in a long spell of unemployment with little chance of finding work again. Based on the predictions in these models, the so-called "Hartz IV" labor market reform recently adopted in Germany should have highly favorable effects on the unemployment rates and welfare in the long run.

Unemployment insurance and job search in the Great Recession
Unemployment insurance and job search in the Great Recession

Author: Jesse Rothstein

Publisher:

Published: 2011

Total Pages: 58

ISBN-13:

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Nearly two years after the official end of the "Great Recession," the labor market remains historically weak. One candidate explanation is supply-side effects driven by dramatic expansions of Unemployment Insurance (UI) benefit durations, to as many as 99 weeks. This paper investigates the effect of these UI extensions on job search and reemployment. I use the longitudinal structure of the Current Population Survey to construct unemployment exit hazards that vary across states, over time, and between individuals with differing unemployment durations. I then use these hazards to explore a variety of comparisons intended to distinguish the effects of UI extensions from other determinants of employment outcomes. The various specifications yield quite similar results. UI extensions had significant but small negative effects on the probability that the eligible unemployed would exit unemployment, concentrated among the long-term unemployed. The estimates imply that UI benefit extensions raised the unemployment rate in early 2011 by only about 0.1-0.5 percentage points, much less than is implied by previous analyses, with at least half of this effect attributable to reduced labor force exit among the unemployed rather than to the changes in reemployment rates that are of greater policy concern.

The Duration of Unemployment Benefits
The Duration of Unemployment Benefits

Author: Merrill G. Murray

Publisher:

Published: 1974

Total Pages: 102

ISBN-13:

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Report on the problem of the time factor in unemployment benefit for the long term unemployed in the USA - cites the regular duration for benefits as provided by state laws, discusses the provision of extended benefits during economic recessions, the problem of financing such benefits, etc., and considers proposals for extended benefits at all times. References and statistical tables.