Unemployment Insurance Generosity and Aggregate Employment | Zendy

Christopher Boone | Zendy; Arindrajit Dubé | Zendy; Lucas Goodman | Zendy; Ethan Kaplan | Zendy

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Unemployment Insurance Generosity and Aggregate Employment

Author(s) -

Christopher Boone,

Arindrajit Dubé,

Lucas Goodman,

Ethan Kaplan

Publication year - 2021

Publication title -

american economic journal economic policy

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.868

H-Index - 62

eISSN - 1945-7731

pISSN - 1945-774X

DOI - 10.1257/pol.20160613

Subject(s) - generosity , unemployment , economics , percentage point , aggregate (composite) , great recession , labour economics , rationing , point (geometry) , duration (music) , aggregate demand , recession , population , demographic economics , monetary economics , keynesian economics , macroeconomics , art , philosophy , materials science , mathematics , economic growth , theology , literature , sociology , composite material , health care , geometry , monetary policy , demography , finance

This paper examines the impact of unemployment insurance (UI) on aggregate employment by exploiting cross-state variation in the maximum benefit duration during the Great Recession. Comparing adjacent counties located in neighboring states, there is no statistically significant impact of increasing UI generosity on aggregate employment. Point estimates are uniformly small in magnitude, and the most precise estimates rule out employment-to-population ratio reductions in excess of 0.35 percentage points from the UI extension. The results contrast with the negative effects implied by most micro-level labor supply studies and are consistent with both job rationing and aggregate demand channels. (JEL E24, E32, J22, J23, J65)

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