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Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits

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  • Rothstein, Jesse
  • Valletta, Robert G.

Abstract

Despite unprecedented extensions of available unemployment insurance (UI) benefits during the “Great Recession†of 2007-09 and its aftermath, large numbers of recipients exhausted their maximum available UI benefits prior to finding new jobs. Using SIPP panel data and an eventstudy regression framework, we examine the household income patterns of individuals whose jobless spells outlast their UI benefits, comparing the periods following the 2001 and 2007-09 recessions. Job loss reduces household income roughly by half on average, and for UI recipients benefits replace just under half of this loss. Accordingly, when benefits end the household loses UI income equal to roughly one-quarter of total pre-separation household income (and about one-third of pre-exhaustion household income). Only a small portion of this loss is offset by increased income from food stamps and other safety net programs. The share of families with income below the poverty line nearly doubles. These patterns were generally similar following the 2001 and 2007-09 recessions and do not vary dramatically by household age or income prior to job loss.

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Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt74x2f4jh.

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Date of creation: 01 Feb 2014
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Handle: RePEc:cdl:indrel:qt74x2f4jh

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Keywords: Social and Behavioral Sciences;

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  1. Andreas I. Mueller & Jesse Rothstein & Till M. von Wachter, 2013. "Unemployment Insurance and Disability Insurance in the Great Recession," NBER Working Papers 19672, National Bureau of Economic Research, Inc.
  2. Kory Kroft & Matthew J. Notowidigdo, 2011. "Should Unemployment Insurance Vary With the Unemployment Rate? Theory and Evidence," NBER Working Papers 17173, National Bureau of Economic Research, Inc.
  3. David Card & Raj Chetty & Andrea Weber, 2007. "The Spike at Benefit Exhaustion: Leaving the Unemployment System or Starting a New Job?," American Economic Review, American Economic Association, vol. 97(2), pages 113-118, May.
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  5. Camille Landais & Pascal Michaillat & Emmanuel Saez, 2011. "Optimal Unemployment Insurance Over the Business Cycle," CEP Discussion Papers dp1078, Centre for Economic Performance, LSE.
  6. Card, David & Levine, Phillip B., 2000. "Extended benefits and the duration of UI spells: evidence from the New Jersey extended benefit program," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 107-138, October.
  7. David Autor & Nicole Maestas & Kathleen Mullen & Alexander Strand, 2011. "Does Delay Cause Decay? The Effect of Administrative Decision Time on the Labor Force Participation and Earnings of Disability Applicants," Working Papers wp258, University of Michigan, Michigan Retirement Research Center.
  8. Raj Chetty, 2008. "Erratum: Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 1197-1197, December.
  9. Rothstein, Jesse, 2011. "Unemployment Insurance and Job Search in the Great Recession," Institute for Research on Labor and Employment, Working Paper Series qt5611t356, Institute of Industrial Relations, UC Berkeley.
  10. Inderbitzin, Lukas & Staubli, Stefan & Zweimüller, Josef, 2013. "Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution," IZA Discussion Papers 7330, Institute for the Study of Labor (IZA).
  11. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
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  14. Stephan Lindner & Austin Nichols, 2012. "The Impact of Temporary Assistance Programs on Disability Rolls and Re-Employment," Working Papers, Center for Retirement Research at Boston College wp2012-2, Center for Retirement Research, revised Jan 2012.
  15. Chetty, Raj, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Scholarly Articles 9751256, Harvard University Department of Economics.
  16. Peter Ganong & Jeffrey B. Liebman, 2013. "The Decline, Rebound, and Further Rise in SNAP Enrollment: Disentangling Business Cycle Fluctuations and Policy Changes," NBER Working Papers 19363, National Bureau of Economic Research, Inc.
  17. John C. Ham & Xianghong Li & Lara Shore-Sheppard, 2009. "Seam Bias, Multiple-State, Multiple-Spell Duration Models and the Employment Dynamics of Disadvantaged Women," NBER Working Papers 15151, National Bureau of Economic Research, Inc.
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Cited by:
  1. Valletta, Robert G., 2014. "Recent extensions of U.S. unemployment benefits: search responses in alternative labor market states," Working Paper Series 2014-13, Federal Reserve Bank of San Francisco.
  2. Valletta, Robert G., 2014. "Recent Extensions of U.S. Unemployment Benefits: Search Responses in Alternative Labor Market States," IZA Discussion Papers 8247, Institute for the Study of Labor (IZA).

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