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Federal Reserve Bank of Philadelphia
Business Review
Economic effects of the unemployment insurance benefit
Shigeru Fujita
Abstract

The U.S. labor market has remained weak in recent years, even though the overall economy itself has started to grow again after the deep recession. In response to the weak labor market conditions, the U.S. government has greatly expanded the entitlement period of unemployment insurance (UI) benefits. In “Economic Effects of the Unemployment Insurance Benefit,” Shigeru Fujita reviews some of the academic literature on the economic effects of UI benefits. On the one hand, UI can improve people’s well being because it helps them avoid a large drop in consumption in the face of job losses when job losers do not have enough savings. On the other hand, there is a concern that it might produce an adverse effect on the incentive to look for a job. The author covers leading theoretical as well as empirical studies, which are useful in evaluating the recent expansion of unemployment insurance benefits.


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Shigeru Fujita, "Economic effects of the unemployment insurance benefit" , Federal Reserve Bank of Philadelphia, Business Review, issue Q4, pages 20-27, 2010.
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Keywords: Unemployment insurance
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