Unemployment Insurance and Job Search in the Great Recession

Jesse Rothstein

No 17534, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Nearly two years after the official end of the "Great Recession," the labor market remains historically weak. One candidate explanation is supply-side effects driven by dramatic expansions of Unemployment Insurance (UI) benefit durations, to as many as 99 weeks. This paper investigates the effect of these UI extensions on job search and reemployment. I use the longitudinal structure of the Current Population Survey to construct unemployment exit hazards that vary across states, over time, and between individuals with differing unemployment durations. I then use these hazards to explore a variety of comparisons intended to distinguish the effects of UI extensions from other determinants of employment outcomes. The various specifications yield quite similar results. UI extensions had significant but small negative effects on the probability that the eligible unemployed would exit unemployment, concentrated among the long-term unemployed. The estimates imply that UI benefit extensions raised the unemployment rate in early 2011 by only about 0.1-0.5 percentage points, much less than is implied by previous analyses, with at least half of this effect attributable to reduced labor force exit among the unemployed rather than to the changes in reemployment rates that are of greater policy concern.

JEL-codes: H53 I38 J64 J65 (search for similar items in EconPapers)
Date: 2011-10
New Economics Papers: this item is included in nep-cis, nep-ias and nep-lab
Note: EFG LS PE
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Citations: View citations in EconPapers (262)

Published as Jesse Rothstein, 2011. "Unemployment Insrance and Job Search in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 143-213.

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Journal Article: Unemployment Insurance and Job Search in the Great Recession (2011)
Working Paper: Unemployment Insurance and Job Search in the Great Recession (2011)
Working Paper: Unemployment Insurance and Job Search in the Great Recession (2011)
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