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

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  • Rothstein, Jesse
  • Valletta, Robert G.

Abstract

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.

Suggested Citation

  • Rothstein, Jesse & Valletta, Robert G., 2014. "Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits," Institute for Research on Labor and Employment, Working Paper Series qt74x2f4jh, Institute of Industrial Relations, UC Berkeley.
    • Handle: RePEc:cdl:indrel:qt74x2f4jh
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    Cited by:

    1. Karen Needels & Walter Nicholson & Joanne Lee & Heinrich Hock, "undated". "Exhaustees of Extended Unemployment Benefits Programs: Coping with the Aftermath of the Great Recession," Mathematica Policy Research Reports 997d98336a084cd681f2e16a6, Mathematica Policy Research.
    2. Robert Valletta, 2014. "Recent extensions of U.S. unemployment benefits: search responses in alternative labor market states," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-25, December.
    3. Alisdair McKay & Ricardo Reis, 2021. "Optimal Automatic Stabilizers [Consumption versus Expenditure]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(5), pages 2375-2406.
    4. Jeffrey Clemens, 2016. "Redistribution through Minimum Wage Regulation: An Analysis of Program Linkages and Budgetary Spillovers," Tax Policy and the Economy, University of Chicago Press, vol. 30(1), pages 163-189.
    5. Pauline Leung & Christopher O'Leary, 2020. "Unemployment Insurance and Means-Tested Program Interactions: Evidence from Administrative Data," American Economic Journal: Economic Policy, American Economic Association, vol. 12(2), pages 159-192, May.
    6. 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 445-475.
    7. Joanne Lee & Karen Needels & Walter Nicholson, "undated". "A Longitudinal Survey of Unemployment Insurance Recipients in Two Regions in California," Mathematica Policy Research Reports 982c8e2b780e479ea249e7b05, Mathematica Policy Research.
    8. Anat Bracha & Mary A. Burke, 2014. "Informal work in the United States: evidence from survey responses," Current Policy Perspectives 14-13, Federal Reserve Bank of Boston.
    9. Heinrich Hock & Walter Nicholson & Karen Needels & Joanne Lee & Priyanka Anand, "undated". "Additional Unemployment Compensation Benefits During the Great Recession: Recipients and Their Post-Claim Outcomes," Mathematica Policy Research Reports 881bfec473cb45498e8392657, Mathematica Policy Research.
    10. McKay, Alisdair, 2017. "Time-varying idiosyncratic risk and aggregate consumption dynamics," Journal of Monetary Economics, Elsevier, vol. 88(C), pages 1-14.
    11. Johannes F. Schmieder & Till von Wachter, 2016. "The Effects of Unemployment Insurance Benefits: New Evidence and Interpretation," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 547-581, October.
    12. Douglas J. Besharov & Antonio López Peláez & Sagrario Segado Sánchez‐Cabezudo, 2016. "The Decline Of The Middle Classes Around The World?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 35(1), pages 245-251, January.

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