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Did pandemic unemployment benefits increase unemployment? Evidence from early state‐level expirations

Author

Listed:
  • Harry J. Holzer
  • Glenn Hubbard
  • Michael R. Strain

Abstract

During the 2021 pandemic year, the generosity of Unemployment Insurance benefits was expanded (Federal Pandemic Unemployment Compensation [FPUC]) and eligibility for benefits was broadened (Pandemic Unemployment Assistance [PUA]). These two programs were set to expire in September 2021. In June 2021, 18 states exited both FPUC and PUA and three states exited FPUC (but not PUA). Using Current Population Survey data and a wide range of estimation methods, we find that the flow of unemployed workers into employment increased by around two‐thirds following early exit among prime‐age workers. We also find evidence of reductions in state‐level unemployment rates, increases in employment‐populations ratios, and reductions in the share of households that had no difficulty meeting expenses.

Suggested Citation

  • Harry J. Holzer & Glenn Hubbard & Michael R. Strain, 2024. "Did pandemic unemployment benefits increase unemployment? Evidence from early state‐level expirations," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 24-38, January.
    • Handle: RePEc:bla:ecinqu:v:62:y:2024:i:1:p:24-38
    DOI: 10.1111/ecin.13180
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    References listed on IDEAS

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    Cited by:

    1. Diane Whitmore Schanzenbach & Michael R. Strain, 2023. "Employment and Labor Supply Responses to the Child Tax Credit Expansion: Theory and Evidence," The ANNALS of the American Academy of Political and Social Science, , vol. 710(1), pages 141-156, November.
    2. Andreas Hornstein & Marios Karabarbounis & Andre Kurmann & Etienne Lale & Lien Ta, 2023. "Disincentive Effects of Unemployment Insurance Benefits," Working Paper 23-11, Federal Reserve Bank of Richmond.
    3. Karen Dynan & Douglas Elmendorf, 2025. "Lessons for Automatic Fiscal Stabilizers from the Great Recession and the COVID Recession," NBER Chapters, in: Tax Policy and the Economy, Volume 40, National Bureau of Economic Research, Inc.

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