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Economic effects of the unemployment insurance benefit

  • Shigeru Fujita

The U.S. labor market has remained weak in recent years, even though the overall economy itself has started to grow again after the deep recession. In response to the weak labor market conditions, the U.S. government has greatly expanded the entitlement period of unemployment insurance (UI) benefits. In “Economic Effects of the Unemployment Insurance Benefit,” Shigeru Fujita reviews some of the academic literature on the economic effects of UI benefits. On the one hand, UI can improve people’s well being because it helps them avoid a large drop in consumption in the face of job losses when job losers do not have enough savings. On the other hand, there is a concern that it might produce an adverse effect on the incentive to look for a job. The author covers leading theoretical as well as empirical studies, which are useful in evaluating the recent expansion of unemployment insurance benefits.

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File URL: http://www.philadelphiafed.org/research-and-data/publications/business-review/2010/q4/brq410_effects-of-unemployment-insurance-benefit.pdf
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Article provided by Federal Reserve Bank of Philadelphia in its journal Business Review.

Volume (Year): (2010)
Issue (Month): Q4 ()
Pages: 20-27

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Handle: RePEc:fip:fedpbr:y:2010:i:q4:p:20-27
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  1. Bruce K. Fallick, 1989. "Unemployment Insurance and the Rate of Re-Employment of Displaced Workers," UCLA Economics Working Papers 550, UCLA Department of Economics.
  2. Card, David & Chetty, Raj & Weber, Andrea, 2007. "The Spike at Benefit Exhaustion: Leaving the Unemployment System or Starting a New Job?," IZA Discussion Papers 2590, Institute for the Study of Labor (IZA).
  3. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
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