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Unemployment Insurance Generosity and Aggregate Employment

Christopher Boone, Arindrajit Dube, Lucas Goodman and Ethan Kaplan

American Economic Journal: Economic Policy, 2021, vol. 13, issue 2, 58-99

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, there is no statistically significant impact of increasing UI generosity on aggregate employment. Point estimates are uniformly small in magnitude, and the most precise estimates rule out employment-to-population ratio reductions in excess of 0.35 percentage points from the UI extension. The results contrast with the negative effects implied by most micro-level labor supply studies and are consistent with both job rationing and aggregate demand channels.

JEL-codes: E24 E32 J22 J23 J65 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (13)

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DOI: 10.1257/pol.20160613

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Handle: RePEc:aea:aejpol:v:13:y:2021:i:2:p:58-99