Search Results
Working Paper
Unemployment Insurance when the Wealth Distribution Matters
This paper analyzes the welfare effects of unemployment insurance in a life-cycle model, focusing on partial vs. general equilibrium effects. We study an OLG economy with learning-by-doing human capital accumulation. Agents can be employed or unemployed. While unemployed agents costly search for new jobs. We calibrate the model to the U.S. economy, and find that replacement ratio and potential duration are close to the current one. But, in contrast with the previous literature, we find that the optimal policies under general and partial equilibrium are almost the same. Through a series of ...
Working Paper
The Implications of Labor Market Heterogeneity on Unemployment Insurance Design
We digitize state-level and time-varying unemployment insurance (UI) laws on initial eligibility, payment amount, and payment duration and combine them with microdata on labor market outcomes to estimate UI eligibility, take-up, and replacement rates at the individual level. We document how levels of income and wealth affect unemployment risk, eligibility,take-up, and replacement rates both upon job loss and over the course of unemployment spells. We evaluate whether these empirical findings are important for shaping UI policy design using a general equilibrium incomplete markets model ...
Journal Article
Which States Are Driving U.S. Employment Growth?
The 2020 CARES Act expanded unemployment insurance benefits for many, but states that opted out early boosted how much they contributed to employment gains.
Working Paper
Consumer Bankruptcy and Unemployment Insurance
We quantitatively evaluate the effects of UI on bankruptcy in an equilibrium model of labor market search and defaultable debt. First, we ask whether a standard unsecured credit model extended with labor market search and matching frictions can account for the negative correlation between UI caps and bankruptcy rates observed in the data. The model can account for this fact only if estimated with the employment rate among bankruptcy filers as a target. Not matching this employment rate underestimates the consumption smoothing benefits of UI cap increases, as the model assigns too much ...
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 ...
Report
Unemployment Benefits and Unemployment in the Great Recession: The Role of Equilibrium Effects
Equilibrium labor market theory suggests that unemployment benefit extensions affect unemployment by impacting both job search decisions by the unemployed and job creation decisions by employers. The existing empirical literature focused on the former effect only. We develop a new methodology necessary to incorporate the measurement of the latter effect. Implementing this methodology in the data, we find that benefit extensions raise equilibrium wages and lead to a sharp contraction in vacancy creation and employment and a rise in unemployment.
Journal Article
Unemployment Insurance Withdrawal
Unemployment insurance benefits were expanded substantially to help overcome the pandemic labor market shock in early 2020. However, improved labor market conditions in early 2021 prompted many states to withdraw from the enhanced unemployment benefits programs several months before the federal program was scheduled to end in early September. A comparison of states that ended enhanced benefits early with those that maintained them suggests that the withdrawal is associated with a small pickup in employer hiring, consistent with prior studies that found the unemployment benefit expansions had ...
Journal Article
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.
Working Paper
Enhanced Unemployment Insurance Benefits in the United States during COVID-19: Equity and Efficiency
We assess the effects of the historically unprecedented expansion of U.S. unemployment insurance (UI) payments during the COVID-19 pandemic. The adverse economic impacts of the pandemic, notably the pattern of job losses and earnings reductions, were disproportionately born by lower-income individuals. Focusing on household income as a broad measure of well-being, we document that UI payments almost completely offset the increase in household income inequality that otherwise would have occurred in 2020 and 2021. We also examine the impacts of the $600 increase in weekly UI benefit payments, ...
Working Paper
Enhanced Unemployment Insurance Benefits in the United States during COVID-19: Equity and Efficiency
We assess the effects of the historically unprecedented expansion of U.S. unemployment insurance (UI) payments during the COVID-19 pandemic. The adverse economic impacts of the pandemic, notably the pattern of job losses and earnings reductions, were disproportionately born by lower-income individuals. Focusing on household income as a broad measure of well-being, we document that UI payments almost completely offset the increase in household income inequality that otherwise would have occurred in 2020 and 2021. We also examine the impacts of the $600 increase in weekly UI benefit payments, ...