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Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits

  • Rothstein, Jesse
  • Valletta, Robert G.

Despite unprecedented extensions of available unemployment insurance (UI) benefits during the “Great Recession†of 2007-09 and its aftermath, large numbers of recipients exhausted their maximum available UI benefits prior to finding new jobs. Using SIPP panel data and an eventstudy regression framework, we examine the household income patterns of individuals whose jobless spells outlast their UI benefits, comparing the periods following the 2001 and 2007-09 recessions. Job loss reduces household income roughly by half on average, and for UI recipients benefits replace just under half of this loss. Accordingly, when benefits end the household loses UI income equal to roughly one-quarter of total pre-separation household income (and about one-third of pre-exhaustion household income). Only a small portion of this loss is offset by increased income from food stamps and other safety net programs. The share of families with income below the poverty line nearly doubles. These patterns were generally similar following the 2001 and 2007-09 recessions and do not vary dramatically by household age or income prior to job loss.

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Paper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt74x2f4jh.

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Date of creation: 01 Feb 2014
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Handle: RePEc:cdl:indrel:qt74x2f4jh
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  2. Andreas I. Mueller & Jesse Rothstein & Till M. von Wachter, 2016. "Unemployment Insurance and Disability Insurance in the Great Recession," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages S445 - S475.
  3. Chetty, Raj, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Scholarly Articles 9751256, Harvard University Department of Economics.
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  7. Landais, Camille & Michaillat, Pascal & Saez, Emmanuel, 2010. "Optimal Unemployment Insurance over the Business Cycle," CEPR Discussion Papers 8132, C.E.P.R. Discussion Papers.
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  13. Henry S. Farber & Robert G. Valletta, 2013. "Do Extended Unemployment Bene ts Lengthen Unemployment Spells? Evidence from Recent Cycles in the U.S. Labor Market," Working Papers 1450, Princeton University, Department of Economics, Industrial Relations Section..
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  16. Raj Chetty, 2008. "Erratum: Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 1197-1197, December.
  17. Camille Landais & Pascal Michaillat & Emmanuel Saez, 2010. "A Macroeconomic Theory of Optimal Unemployment Insurance," NBER Working Papers 16526, National Bureau of Economic Research, Inc.
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