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Early Withdrawal of Pandemic Unemployment Insurance: Effects on Employment and Earnings

Author

Listed:
  • Kyle Coombs
  • Arindrajit Dube
  • Calvin Jahnke
  • Raymond Kluender
  • Suresh Naidu
  • Michael Stepner

Abstract

We examine the effects of the sudden withdrawal of expanded pandemic unemployment benefits in June 2021 using anonymized bank transaction data for 16,253 individuals receiving unemployment insurance (UI) in April 2021. Comparing the difference-in-differences between states withdrawing and retaining expanded UI, we find that UI receipt falls 36.3 p.p., while employment rises by only 6.8 p.p. by early September. Average cumulative UI benefits fall by $2,529, while average cumulative earnings increase by only $292. Heterogeneity by unemployment duration implies that these effects are primarily driven by extensive margin expiration of benefits rather than by intensive margin reductions in the benefit level.

Suggested Citation

  • Kyle Coombs & Arindrajit Dube & Calvin Jahnke & Raymond Kluender & Suresh Naidu & Michael Stepner, 2022. "Early Withdrawal of Pandemic Unemployment Insurance: Effects on Employment and Earnings," AEA Papers and Proceedings, American Economic Association, vol. 112, pages 85-90, May.
    • Handle: RePEc:aea:apandp:v:112:y:2022:p:85-90
    DOI: 10.1257/pandp.20221009
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    Citations

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    Cited by:

    1. Goda, Gopi Shah & Jackson, Emilie & Nicholas, Lauren Hersch & Stith, Sarah See, 2023. "Older workers’ employment and Social Security spillovers through the second year of the COVID-19 pandemic," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(4), pages 524-549, October.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • 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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