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Unemployment Insurance: New Findings on Reporting, Effects, and Intergenerational Impacts

Paper Session

Sunday, Jan. 7, 2024 8:00 AM - 10:00 AM (CST)

Grand Hyatt, Republic B
Hosted By: American Economic Association
  • Chair: Till von Wachter, University of California-Los Angeles

The Reporting of Unemployment Insurance and Unemployment in Survey and Administrative Sources

Bruce D. Meyer
,
University of Chicago
Derek Wu
,
University of Virginia
Matthew Stadnicki
,
University of Chicago
Patrick Langetieg
,
Internal Revenue Service

Abstract

We provide the first national estimates of misreporting of unemployment insurance (UI) receipt in Census surveys. We link the Current Population Survey Annual Social and Economic Supplement (CPS) and the Survey of Income and Program Participation (SIPP) to two sources of administrative UI receipt from IRS Forms 1099-G and 1040 for reference year 2010. We find that 24% of true UI recipients according to 1099-Gs do not report their UI receipt on 1040s, with 56% of this group not filing any tax returns despite at least 55% of non-filing UI recipients apparently having taxable incomes above the filing threshold. Since this indicates that 1099-Gs are a more complete source, we compare them to CPS and SIPP microdata, finding that aggregate UI dollars in both surveys are understated by 36-38%. The vast majority of this understatement comes from the fact that 39% and 35% of UI recipients do not report any receipt in the CPS and SIPP, respectively. In addition, we find that 49% of UI recipients never report being unemployed in the CPS, with 45% of this group reporting that they worked on a full-time basis for the entire year.

The Effect of Unemployment Insurance for Self-Employed and Marginally-Attached Workers

Andy Garin
,
Carnegie Mellon University
Dmitri K. Koustas
,
University of Chicago
Emilie Jackson
,
Michigan State University

Abstract

We study the temporary extension of Unemployment Insurance (UI) benefits to groups of workers typically excluded from the UI system–including gig workers, the self-employed more broadly, and labor market entrants with limited work experience–implemented as part of the United States policy response to the 2020 COVID-19 crisis. We document that, although enacted at the federal level, the state level implementation resulted in large differences in the roll-out of benefits across jurisdictions in practice. We exploit this cross-state variation to estimate the causal impacts of these UI expansions on the labor supply, education choices, and mortality of affected groups using a spatial regression discontinuity design. We find that every additional dollar in UI payments received by self-employed workers led to a 28 cent reduction in their earnings, and find bigger reductions among platform-based gig workers of 48 cents. Our preferred explanation is that responses were larger among these gig workers because delivery remained a viable work option even as many other sectors were largely shut down by the pandemic. We find that the reduction in work done by older gig workers led to reductions in their mortality during the pandemic that can be plausibly linked to reduced exposure to COVID though work–but find no effect among the self-employed more broadly.

Unemployment Insurance, Starting Salaries, and Jobs: Evidence from Multi-State Firms

Gordon Dahl
,
University of California-San Diego
Matt Knepper
,
University of Georgia

Abstract

We study the labor market effects of permanent 23-50% reductions in unemployment insurance benefits available in seven states. Leveraging linked firm-establishment data, we find that establishments based in reform states experience 1.5-2.4% faster employment growth relative to the same firm’s establishments in other states. Using a similar multi-state firm design, starting salaries are 1.8-7.2% lower in reform states and posted salaries for the same job fall by 1.4-5.5%. These labor supply shocks yield an average labor demand elasticity of -1.0. Our results reveal a substantial decline in match quality and worker bargaining power as UI benefits become less generous.

Intergenerational Effects of Unemployment Insurance: Evidence from Tax Data

Connor Cole
,
U.S. Treasury Department
Corbin Miller
,
U.S. Treasury Department
Ruidi Huang
,
Southern Methodist University
Barton Willage
,
University of Colorado
Erik Mayer
,
University of Wisconsin

Abstract

Parental job loss can negatively affect children in a number of ways, but little is known about whether unemployment insurance (UI) helps insulate children from some of these harms. Unemployment insurance generosity is determined based on state-level policies and whether unemployment rates exceed predetermined thresholds. We estimate the effect of increased UI generosity on the long-run education and labor market outcomes for the children of displaced workers using detailed administrative tax records. Increasing maximum total UI benefits by $10,000 for parents increases their children’s earnings by $224 at age 26 and their children’s tax liability by $44. Approximately two-thirds of the cost of expanding UI is recouped from children’s future tax payments. We find that increasing UI generosity protects children from the harm of parental job loss and has important consequences for children’s long-run outcomes.

Discussant(s)
Till von Wachter
,
University of California-Los Angeles
Andrew Johnston
,
University of California-Merced
Maxim Massenkoff
,
Naval Postgraduate School
Derek Wu
,
University of Virginia
JEL Classifications
  • J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers
  • H5 - National Government Expenditures and Related Policies