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Don’t let me down: unemployment insurance in the United States

Author

Listed:
  • Francesco Spadafora

    (Bank of Italy)

Abstract

The Unemployment Insurance (UI) system in the United States has once again played a decisive lifeline role in effectively mitigating the economic and social impact of the Covid-19 pandemic, which prompted an expansion of UI programmes unprecedented in scope, scale and cost. However, the crisis has exposed afresh some well-known challenges for the programme, perhaps best epitomized by the fact that, on the eve of the pandemic, less than one in three unemployed workers collected UI benefits. The objective of this paper is threefold: first, it provides a comprehensive overview of the main structural characteristics of the UI system; second, it compares the role played by UI programmes in mitigating the impact of both the 2008-09 Great Recession and the 2020 Covid-19 pandemic; and third, it discusses the main reform proposals put forth to address the challenges identified for the UI system. The experience with the UI system provides fundamental lessons that can usefully inform the debate on whether and how to introduce a common unemployment insurance scheme in Europe for macroeconomic stabilization.

Suggested Citation

  • Francesco Spadafora, 2022. "Don’t let me down: unemployment insurance in the United States," Questioni di Economia e Finanza (Occasional Papers) 673, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_673_22
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2022-0673/QEF_673_22.pdf
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    References listed on IDEAS

    as
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    Keywords

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    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
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • 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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