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Macroeconomic Effects of UI Extensions at Short and Long Durations

Author

Listed:
  • Acosta, Miguel
  • Mueller, Andreas I.
  • Nakamura, Emi
  • Steinsson, Jon

Abstract

We study the macroeconomic effects of unemployment insurance (UI) benefit extensions in the United States at short and long durations. To do this, we develop a new state level dataset on trigger variables for UI extensions and a "UI benefit calculator" based on detailed legislative and administrative sources spanning five decades. Our identification approach exploits variation across states in the options governing the Extended Benefits program. We find that UI extensions during time periods when UI benefit durations are already long—such as in the Great Recession—have minimal effects. However, UI extensions when initial durations are shorter have substantial effects on the unemployment rate and the number of people receiving UI. Through the lens of a search-and-matching model, we show that our estimates are consistent with microeconomic estimates of the duration elasticity to UI, implying small general equilibrium effects of UI extensions.

Suggested Citation

  • Acosta, Miguel & Mueller, Andreas I. & Nakamura, Emi & Steinsson, Jon, 2023. "Macroeconomic Effects of UI Extensions at Short and Long Durations," CEPR Discussion Papers 18534, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18534
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    Cited by:

    1. is not listed on IDEAS
    2. Jessen, Jonas & Jessen, Robin & Galecka-Burdziak, Ewa & Góra, Marek & Kluve, Jochen, 2023. "The Micro and Macro Effects of Changes in the Potential Benefit Duration," IZA Discussion Papers 15978, Institute of Labor Economics (IZA).
    3. David Autor & David Dorn & Gordon Hanson & Maggie R. Jones & Bradley Setzler, 2024. "Places versus People: The Ins and Outs of Labor Market Adjustment to Globalization," Working Papers 24-78, Center for Economic Studies, U.S. Census Bureau.
    4. Wee, Shu Lin, 2025. "Optimal unemployment insurance with multiple applications," Journal of Monetary Economics, Elsevier, vol. 154(C).
    5. Erik Dasenbrock & Britta Gehrke, 2025. "Unemployment Benefits and Interest Rates: The Role of Age," Berlin School of Economics Discussion Papers 0074, Berlin School of Economics.

    More about this item

    Keywords

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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