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Jel Classification:J65 

Working Paper
Labor Market Responses to Unemployment Insurance: The Role of Heterogeneity

We document considerable scope of heterogeneity within the unemployed, especially when the unemployed are divided along eligibility and receipt of unemployment insurance (UI). We study the implications of this heterogeneity on UI’s insurance-incentive trade-off using a heterogeneous-agent job-search model capable of matching the wealth and income differences that distinguish UI recipients from non-recipients. Insurance benefits are larger for UI recipients who are predominantly wealth-poor. Meanwhile, incentive costs are nonmonotonic in wealth because the poorest individuals, who value ...
Working Papers , Paper 2019-022

Journal Article
How Does Informal Employment Affect the Design of Unemployment Insurance and Employment Protection?

The authors use a simple model to study the optimal design of unemployment insurance and employment protection. Workers are risk averse and face the possibility of unemployment. Firms are risk neutral and face random shocks to productivity. Workers can participate in a shadow economy, or informal sector. The model yields several lessons. First, countries should encourage formal employment to address the issue of informal employment. In extreme cases, such encouragement translates into high severance payments and negative payroll taxes. Along these same lines, unemployment payments cannot be ...
Review , Volume 97 , Issue 2

Working Paper
Designing Unemployment Insurance for Developing Countries

The benefits of implementing Unemployment Insurance Savings Accounts (UISAs) are studied in the presence of the multiple sources of information frictions often existing in developing countries. A benchmark incomplete markets economy is calibrated to Mexico in the early 2000s. The unconstrained optimal allocation would imply very large welfare gains relative to the benchmark economy (similar to an increase in consumption of 23% in every period). More importantly, in presence of multiple sources of information frictions, about half of those potential gains can be accrued through the ...
Working Papers , Paper 2018-6

Working Paper
The Limited Macroeconomic Effects of Unemployment Benefit Extensions

By how much does an extension of unemployment benefits affect macroeconomic outcomes such as unemployment? Answering this question is challenging because U.S. law extends benefits for states experiencing high unemployment. We use data revisions to decompose the variation in the duration of benefits into the part coming from actual differences in economic conditions and the part coming from measurement error in the real-time data used to determine benefit extensions. Using only the variation coming from measurement error, we find that benefit extensions have a limited influence on state-level ...
Working Papers , Paper 733

Working Paper
Using the Eye of the Storm to Predict the Wave of Covid-19 UI Claims

We leverage an event-study research design focused on the seven costliest hurricanes to hit the US mainland since 2004 to identify the elasticity of unemployment insurance filings with respect to search intensity. Applying our elasticity estimate to the state-level Google Trends indexes for the topic “unemployment,” we show that out-of-sample forecasts made ahead of the official data releases for March 21 and 28 predicted to a large degree the extent of the Covid-19 related surge in the demand for unemployment insurance. In addition, we provide a robust assessment of the uncertainty ...
Working Paper Series , Paper WP-2020-10

Discussion Paper
Who Benefited Most from the CARES Act Unemployment Insurance Provisions?

The regular unemployment insurance (UI) program in the United States requires workers to have a minimum amount of earnings as well as a sufficient work history before unemployment. Low-wage workers are more likely to have a short work history before unemployment because they are more likely to be separated from their jobs. Pandemic Unemployment Assistance (PUA) under the CARES Act temporarily eliminated the requirements for minimum past earnings and length of employment, thus making many low-wage workers who were ineligible for UI under the regular program temporarily eligible. The extra ...
Policy Hub

Working Paper
Using the Eye of the Storm to Predict the Wave of Covid-19 UI Claims

We leverage an event-study research design focused on the seven costliest hurricanes to hit the US mainland since 2004 to identify the elasticity of unemployment insurance filings with respect to search intensity. Applying our elasticity estimate to the state-level Google Trends indexes for the topic “unemployment,” we show that out-of-sample forecasts made ahead of the official data releases for March 21 and 28 predicted to a large degree the extent of the Covid-19 related surge in the demand for unemployment insurance. In addition, we provide a robust assessment of the uncertainty ...
Working Paper Series , Paper WP-2020-10

Discussion Paper
The CARES Act Unemployment Insurance Program during the COVID-19 Pandemic

The outbreak of COVID-19 led to widespread shutdowns in March and April 2020 and an historically unprecedented increase in the generosity of unemployment insurance (UI) through the CARES Act. This article summarizes the key policy-relevant results from Fang, Nie, and Xie (2020), whose research examines the interactions of virus infection risk, shutdown policy, and increased UI generosity.
Policy Hub , Paper 2020-16

Working Paper
Unemployment Insurance during a Pandemic

The CARES Act implemented in response to the COVID-19 crisis dramatically increased the generosity of unemployment insurance (UI) benefits, triggering concerns about substantial effects on unemployment. This paper combines a labor market search-matching model with the SIR-type infection dynamics to study the effects of the CARES Act UI on both unemployment and infection. More generous UI policies create work disincentives and lead to higher unemployment but also reduce infection and save lives. Economic shutdown policies further amplify these effects of UI policies. Quantitatively, the CARES ...
Research Working Paper , Paper RWP 20-07

Working Paper
Advance Layoff Notices and Labor Market Forecasting

We collect rich establishment-level data about advance layoff notices filed under the Worker Adjustment and Retraining Notification (WARN) Act since January 1990. We present in-sample evidence that the number of workers affected by WARN notices leads state-level initial unemployment insurance claims, changes in the unemployment rate, and changes in private employment. The effects are strongest at the one and two-month horizons. After aggregating state-level information to a national-level “WARN factor” using a dynamic factor model, we find that the factor substantially improves ...
Working Papers , Paper 20-03

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Xie, Zoe 9 items

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