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Should We Have Automatic Triggers for Unemployment Benefit Duration and How Costly Would They Be?

Author

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  • Gabriel Chodorow-Reich
  • Peter Ganong
  • Jonathan Gruber

Abstract

We model automatic trigger policies for unemployment insurance by simulating a weekly panel of individual labor market histories, grouped by state. We reach three conclusions: (i) policies designed to trigger immediately at the onset of a recession result in benefit extensions that occur in less sick labor markets than the historical average for benefit extensions, (ii) the ad hoc extensions in the 2001 and 2007−2009 recessions compare favorably ex post to common proposals for automatic triggers, and (iii) compared to ex post policy, the cost of common proposals for automatic triggers is close to zero.

Suggested Citation

  • Gabriel Chodorow-Reich & Peter Ganong & Jonathan Gruber, 2022. "Should We Have Automatic Triggers for Unemployment Benefit Duration and How Costly Would They Be?," AEA Papers and Proceedings, American Economic Association, vol. 112, pages 112-116, May.
    • Handle: RePEc:aea:apandp:v:112:y:2022:p:112-16
    DOI: 10.1257/pandp.20221075
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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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