Unemployment Insurance Generosity and Aggregate Employment

Christopher Boone (), Arindrajit Dube, Lucas Goodman () and Ethan Kaplan ()
Additional contact information
Lucas Goodman: University of Maryland at College Park
Ethan Kaplan: University of Maryland at College Park

No 10439, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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, we find no statistically significant impact of increasing UI generosity on aggregate employment. Our point estimates are uniformly small in magnitude, and the most precise estimates rule out employment-to-population ratio reductions in excess of 0.32 percentage points from the UI extension. We show that a moderately sized fiscal multiplier can rationalize our findings with the small negative labor supply impact of UI typically found in the literature.

Keywords: fiscal multiplier; unemployment insurance; labor supply (search for similar items in EconPapers)
JEL-codes: E32 E62 J65 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2016-12
New Economics Papers: this item is included in nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published - published in: American Economic Journal: Economic Policy, 2021, 13 (2), 58–99

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Related works:
Journal Article: Unemployment Insurance Generosity and Aggregate Employment (2021)
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