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Unemployment Insurance and Household Welfare: Microeconomic Evidence 1980-93


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  • Daniel S. Hamermesh
  • Daniel T. Slesnick


This study examines the relative economic well-being of households that receive unemployment insurance (UI) benefits, as measured by consumption flows that are derived from information on households' spending in the Consumer Expenditure Surveys from 1980- 1993. For each quarter during this period we obtain the per-capita and equivalence-scale adjusted economic welfare of the two types of households. Adjusting for differences in the households' characteristics, we find: 1) The average UI recipient household during this period had a level of economic well-being that was on average between 3 and 8 percent below that of otherwise identical households (depending on the welfare measure used); 2) During a substantial part of this time the economic well-being of households that received UI benefits was at least that of other households; and 3) There is no cyclical variation in the relative well-being of UI recipient households compared to others. The findings imply that during the 1980s and early 1990s states' UI programs did a satisfactory job of maintaining the well-being of UI recipients. Emergency programs enacted during recessions raised potential duration sufficiently to prevent the economic position of the average UI recipient from deteriorating.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5315.

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Date of creation: Oct 1995
Date of revision:
Publication status: forthcoming: Research in Employment Policy, 1997.
Handle: RePEc:nbr:nberwo:5315

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Cited by:
  1. Gonzalo Reyes Hartley & Jan C Van Ours & Milan Vodopivec, 2010. "Incentive Effects of Unemployment Insurance Savings Accounts: Evidence from Chile," Working Papers, Superintendencia de Pensiones 40, Superintendencia de Pensiones, revised Feb 2010.
  2. Vodopivec, Milan, 2009. "Introducing unemployment insurance to developing countries," Social Protection Discussion Papers 49170, The World Bank.
  3. Walter Nicholson & Karen Needels, 2006. "Unemployment Insurance: Strengthening the Relationship between Theory and Policy," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 20(3), pages 47-70, Summer.
  4. Vodopivec, Milan & Raju, Dhushyanth, 2002. "Income support systems for the unemployed : issues and options," Social Protection Discussion Papers 25529, The World Bank.
  5. Katherine Baicker & Claudia Goldin & Lawrence F. Katz, 1997. "A Distinctive System: Origins and Impact of U.S. Unemployment Compensation," NBER Working Papers 5889, National Bureau of Economic Research, Inc.


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