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Reservation Benefits: Assessing job acceptance impacts of increased UI payments

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Abstract

Job acceptance decisions weigh the value of an entire job spell relative to remaining unemployed. There exists a reservation level of benefit payments in this dynamic decision problem at which an individual is indifferent between accepting and refusing an offer. This reservation benefit is a simple statistic to test the job acceptance deterrence effects of current unemployment insurance (UI) payments, summarizing the decision problem conditional on the believed state of the labor market and the weeks of UI compensation remaining. Estimating the reservation benefit for a wide range of US workers suggests few would turn down an offer to returnto work at the previous wage under the increased UI payments and extended duration provided by the CARES Act .

Suggested Citation

  • Nicolas Petrosky-Nadeau, 2020. "Reservation Benefits: Assessing job acceptance impacts of increased UI payments," Working Paper Series 2020-28, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:88541
    DOI: 10.24148/wp2020-28
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    File URL: https://www.frbsf.org/economic-research/files/wp2020-28.pdf
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    Cited by:

    1. Ganong, Peter & Noel, Pascal & Vavra, Joseph, 2020. "US unemployment insurance replacement rates during the pandemic," Journal of Public Economics, Elsevier, vol. 191(C).
    2. Yahong Zhang, 2022. "Unemployment Benefits and Wage Subsidies -- Effects of Labour Market Policies during a Pandemic," Working Papers 2203, University of Windsor, Department of Economics, revised Sep 2022.
    3. Marinescu, Ioana & Skandalis, Daphné & Zhao, Daniel, 2021. "The impact of the Federal Pandemic Unemployment Compensation on job search and vacancy creation," Journal of Public Economics, Elsevier, vol. 200(C).
    4. Finamor, Lucas & Scott, Dana, 2021. "Labor market trends and unemployment insurance generosity during the pandemic," Economics Letters, Elsevier, vol. 199(C).

    More about this item

    Keywords

    Unemployment insurance; Job acceptance; COVID-19; Unemployment;
    All these keywords.

    JEL classification:

    • 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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