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Increasing Employment by Halting Pandemic Unemployment Benefits

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Abstract

In mid-2021, 26 states halted participation in all or some federal emergency unemployment benefits (EUB) programs before those programs' federal funding lapsed. This article uses this asynchronous EUB cessation between early- and late-halting states to estimate the causal impact of benefit cessation on employment. We find that cessation increased employment by 29 persons for every 100 (pre-halt) EUB recipients. Expressed as a number of jobs, if all states had halted EUB in June, September employment would have been 3.4 million persons higher relative to a no-halt counterfactual. Late-halting states could have significantly accelerated their states' jobs recoveries in the second half of 2021 through early program cessation.

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  • Iris Arbogast & Bill Dupor, 2022. "Increasing Employment by Halting Pandemic Unemployment Benefits," Review, Federal Reserve Bank of St. Louis, vol. 104(3), pages 166-177, July.
    • Handle: RePEc:fip:fedlrv:94389
    DOI: 10.20955/r.104.166-77
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    1. Holzer, Harry J. & Hubbard, Glenn & Strain, Michael R., 2021. "Did Pandemic Unemployment Benefits Reduce Employment? Evidence from Early State-Level Expirations in June 2021," IZA Discussion Papers 14927, Institute of Labor Economics (IZA).
    2. Henry S. Farber & Jesse Rothstein & Robert G. Valletta, 2015. "The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out," American Economic Review, American Economic Association, vol. 105(5), pages 171-176, May.
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    1. Iris Arbogast & Bill Dupor, 2022. "The Jobs Effect of Ending Pandemic Unemployment Benefits: A State-Level Analysis," Working Papers 2022-010, Federal Reserve Bank of St. Louis, revised 08 Feb 2023.

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    More about this item

    Keywords

    COVID-19; employment; unemployment benefits;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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