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Between a rock and a hard place: The costs and benefits of expanded unemployment insurance benefits

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  • Hamdi, Naser
  • Kalda, Ankit
  • Sovich, David

Abstract

We examine how the withdrawal of the largest expansion of unemployment insurance (UI) benefits in United States history affected job-finding, demand for other government assistance, and credit defaults. Using administrative UI data merged with credit records and applications for Medicaid and SNAP, we show that UI withdrawal led to an increase in job-finding that was most pronounced among financially constrained individuals with limited available credit. The cost savings from higher job-finding came at the expense of increased demand for other government services and higher defaults. Our results highlight an important interaction between UI, household finances, and other social insurance programs.

Suggested Citation

  • Hamdi, Naser & Kalda, Ankit & Sovich, David, 2025. "Between a rock and a hard place: The costs and benefits of expanded unemployment insurance benefits," Journal of Public Economics, Elsevier, vol. 242(C).
    • Handle: RePEc:eee:pubeco:v:242:y:2025:i:c:s0047272724002317
    DOI: 10.1016/j.jpubeco.2024.105295
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    References listed on IDEAS

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