Aggregate Employment Effects of Unemployment Benefits During Deep Downturns: Evidence from the Expiration of the Federal Pandemic Unemployment Compensation

Arindrajit Dube

No 28470, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The expiration of the temporary $600 boost to weekly UI benefits under the Federal Pandemic Unemployment Compensation (FPUC) led to a sharp, unprecedented, 98 percentage point reduction (on average) in the replacement rate during a time when employment was recovering during the Covid recession. Leveraging the considerable variation in this drop across states, I use a difference-in-differences event study design to estimate the macro employment effects. I find little impact of job gains from the benefit reduction, especially when I focus on groups (non-college graduates, and those from non-high-income households) that comprise of most UI recipients. The estimates rule out job gains implied by much of the micro UI duration elasticities from the existing literature.

JEL-codes: E24 E62 E65 (search for similar items in EconPapers)
Date: 2021-02
New Economics Papers: this item is included in nep-ias, nep-mac and nep-pke
Note: EFG LS PE
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