Unemployment Insurance Extensions, Labor Market Concentration, and Match Quality

I investigate whether the effects of UI extensions are different for workers exposed to higher levels of local labor market concentration, a potential source of employer market power. I exploit measurement error in state unemployment rates that led to quasi-random assignment of UI durations in the U.S. during the Great Recession. Using matched employer-employee data from the Longitudinal Employer-Household Dynamics (LEHD) program, I find that UI extensions lengthen nonemployment durations by one week and cause economically meaningful but not statistically significant increases in earnings. The UI-earnings effect is significantly smaller at higher levels of concentration, while there is no difference in the UI-duration effect. The lower UI-earnings effect is driven by the extremes of the distribution of concentration. My results suggest that match improvements from UI are attenuated at higher levels of concentration. This technical report summarizes the code and data workflow and provides a short summary of the findings. A full write-up of the results can be found in CES Working Paper 26-24. The Census Bureau’s Disclosure Review Board and Disclosure Avoidance Officers have reviewed this information product for unauthorized disclosure of confidential information and have approved the disclosure avoidance practices applied to this release (Project co02564: CBDRB-FY22-P2564-R9730, CBDRB-FY22-P2564-R9765, CBDRB-FY22-P2564-R10066, CBDRB-FY23-P2564-R10107, CBDRB-FY23-P2564-R10207, CBDRB-FY24-P2564-R11080).