Working Paper

Reservation Benefits: Assessing job acceptance impacts of increased UI payments

Abstract: Job acceptance decisions weigh the value of an entire job spell relative to remaining unemployed. There exists a reservation level of benefit payments in this dynamic decision problem at which an individual is indifferent between accepting and refusing an offer. This reservation benefit is a simple statistic to test the job acceptance deterrence effects of current unemployment insurance (UI) payments, summarizing the decision problem conditional on the believed state of the labor market and the weeks of UI compensation remaining. Estimating the reservation benefit for a wide range of US workers suggests few would turn down an offer to returnto work at the previous wage under the increased UI payments and extended duration provided by the CARES Act .

Keywords: Unemployment insurance; Job acceptance; COVID-19; Unemployment;

JEL Classification: J64; J65;

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Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Working Paper Series

Publication Date: 2020-08-04

Number: 2020-28

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