Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut
Andrew Johnston and
No 22411, NBER Working Papers from National Bureau of Economic Research, Inc
We examine how a 16-week cut in potential unemployment insurance (UI) duration in Missouri affected search behavior of UI recipients and the aggregate labor market. Using a regression discontinuity design (RDD), we estimate a marginal effect of maximum duration on UI and nonemployment spells of approximately 0.5 and 0.3 respectively. We use RDD estimates to simulate the unemployment rate assuming no market-level externalities. The simulated response closely approximates the estimated change in the unemployment rate following the benefit cut, suggesting that even in a period of high unemployment the labor market absorbed this influx of workers without crowding-out other jobseekers.
JEL-codes: E24 H0 J6 J64 J65 (search for similar items in EconPapers)
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Working Paper: Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut (2015)
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