Unemployment Insurance Extensions, Labor Market Concentration, and Match Quality

David N. Wasser

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: I investigate whether the effects of UI extensions are different for workers exposed to higher levels of local labor market concentration, a potential source of employer market power. I exploit measurement error in state unemployment rates that led to quasi-random assignment of UI durations in the U.S. during the Great Recession. Using matched employer-employee data from the Longitudinal Employer-Household Dynamics program, I find that UI extensions lengthen nonemployment durations by one week and cause economically meaningful but not statistically significant increases in earnings. The UI-earnings effect is significantly lower at higher levels of concentration, while there is no difference in the UI-duration effect. The lower UI-earnings effect is driven by the extremes of the distribution of concentration. My results suggest that match improvements from UI are attenuated at higher levels of concentration.

Keywords: Unemployment insurance; labor market concentration; local labor markets; earnings; nonemployment duration (search for similar items in EconPapers)
JEL-codes: J31 J42 J65 (search for similar items in EconPapers)
Date: 2026-04
New Economics Papers: this item is included in nep-com and nep-lma
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https://www2.census.gov/library/working-papers/2026/adrm/ces/CES-WP-26-24.pdf First version, 2026 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:26-24

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