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  2. ASSA Annual Meeting
  3. 2022
  4. Preliminary Program
  5. Equity and Efficiency in Unemployment Insurance
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Equity and Efficiency in Unemployment Insurance

Paper Session

Saturday, Jan. 8, 2022 12:15 PM - 2:15 PM (EST)

Hosted By: American Economic Association
  • Chair: Michael W. Horrigan, W.E. Upjohn Institute for Employment Research

Spending and Job Search Impacts of Expanded Unemployment Benefits: Evidence from Administrative Micro Data

Peter Ganong
,
University of Chicago and NBER
Fiona Greig
,
JPMorgan Chase Institute
Pascal Noel
,
University of Chicago
Daniel M. Sullivan
,
JPMorgan Chase Institute

Abstract

How did the largest expansion of unemployment benefits in U.S. history affect household behavior? Using anonymized bank account data covering millions of households, we provide new empirical evidence on the spending and job search responses to benefit changes during the pandemic and compare those responses to the predictions of benchmark structural models. We find that spending responds more than predicted, while job search responds an order of magnitude less than predicted. In sharp contrast to normal times when spending falls after job loss, we show that when expanded benefits are available, spending of the unemployed actually rises after job loss. Using quasi-experimental research designs, we estimate a large marginal propensity to consume out of benefits. Notably, spending responses are large even for households who have built up substantial liquidity through prior receipt of expanded benefits. These large responses contrast with a theoretical prediction that spending responses should shrink with liquidity.

An Analysis of Unemployment Insurance Claims in California During the COVID-19 Pandemic

Till M. von Wachter
,
University of California-Los Angeles and NBER
Alex Bell
,
University of California-Los Angeles
Thomas J. Hedin
,
University of California-Los Angeles
Geoffrey Schnorr
,
California Employment Development Department

Abstract

This paper presents a deep dive by the California Policy Lab at UCLA into access and use of unemployment insurance (UI) in California during the pandemic. It starts by examining initial claims--including Pandemic Unemployment Assistance (PUA) claims for federally funded benefits to those that do not qualify for regular UI benefits because of work in non-covered sectors. New measures of weekly UI receipt are also presented along with a breakdown by demographics and industry. This paper includes a detailed geographic analysis of UI claims across California’s nearly 8,000 Census tracts. Essential measurements during the pandemic include the following results: by mid-March 2020, 8.7 million unique California claimants, or 45% of the California workforce applied for some type of UI benefits, and the number of workers receiving unemployment benefits remained startlingly high for a protracted period with 4.1 million claimants, or 22% of the state’s labor force receiving regular UI or PUA benefits for unemployment in November 2020. Additionally, residents of already-disadvantaged neighborhoods were least insured against job loss in the pandemic. We find that unemployed people in communities of concentrated poverty and with higher shares of racial and ethnic minorities have been less likely to receive regular UI benefits. Descriptive analysis across California’s 8,000 Census tracts suggest that a variety of channels – including legal work authorization, language, and the technological divide – may play a role in some unemployed workers not being able to access UI benefits during the pandemic.

Early Withdrawal of Pandemic Unemployment Insurance: Effects on Earnings, Employment and Consumption

Kyle Coombs
,
Columbia University
Arindrajit Dube
,
University of Massachusetts Amherst and NBER
Calvin Jahnke
,
Harvard University
Raymond Kluender
,
Harvard University
Suresh Naidu
,
Columbia University and NBER
Michael Stepner
,
University of Toronto and Opportunity Insights

Abstract

In June 2021, 22 states ended all supplemental pandemic unemployment insurance (UI) benefits, eliminating benefits entirely for over 2 million workers and reducing benefits by $300 per week for over 1 million workers. Using anonymous bank transaction data and a difference-in- differences research design, we measure the effect of withdrawing pandemic UI on the financial and employment trajectories of unemployed workers in states that withdrew benefits, compared to workers with the same unemployment duration in states that retained these benefits. In our data through August 6, we find that ending pandemic UI increased employment by 4.4 percentage points while reducing UI recipiency by 35 percentage points among workers who were unemployed and receiving UI at the end of April 2021. Through the first week of August, average UI benefits for these workers fell by $278 per week and earnings rose by $14 per week, offsetting only 5% of the loss in income. Spending fell by $145 per week, as the loss of benefits led to a large immediate decline in consumption.

Equity in Unemployment Insurance Benefit Access

Christopher J. O'Leary
,
W.E. Upjohn Institute for Employment Research
William E. Spriggs
,
Howard University and AFL-CIO
Stephen A. Wandner
,
National Academy of Social Insurance

Abstract

This paper examines the uneven pattern of access to unemployment insurance (UI) by age, gender, and race across the United States. We present results from a descriptive analysis using publicly available summary data reported by states over time on rates of UI recipiency and characteristics of UI beneficiaries. Recipiency measures the proportion of all unemployed who are receiving UI benefits. UI is intended to provide temporary, partial income replacement, to involuntarily unemployed UI applicants, with strong labor force attachments, while they are able, available, and actively seeking return to work. Each of these UI eligibility conditions contributes to the UI recipiency rate being less than 100 percent, and individual resolve to apply for benefits also affects the recipiency rate. We examine each of these factors find suggestive evidence of reasons for differences in recipiency by age, gender, and race that could be improved by changes in public policy to improve equity in access to UI. We discuss practical program reforms that could be adopted by all states and required by the federal government.

Discussant(s)
Patricia M. Anderson
,
Dartmouth College and NBER
Julie Whittaker
,
Library of Congress
JEL Classifications
  • J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers
  • H8 - Miscellaneous Issues