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COBOLing Together UI Benefits: How Delays in Fiscal Stabilizers Affect Aggregate Consumption

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  • Michael Navarrete

Abstract

The United States experienced an unprecedented increase in unemployment insurance (UI) claims beginning in March 2020. State UI-benefit systems were strained beyond their administrative capacity to process the dual challenge of an unprecedented increase in claims and changes to UI benefits. In states that used an antiquated programming language, COBOL, to process claims, potential claimants experienced a larger increase in administrative difficulties, resulting in longer delays in benefit disbursement. States that used an antiquated UI-benefit system experienced a 2.8 percentage point decline in total credit and debit card consumption relative to card consumption in states with more modern UI benefit systems. Furthermore, states that used these antiquated systems experienced at least a 2.1 percentage point increase in the share of claims that were delayed by more than 70 days.

Suggested Citation

  • Michael Navarrete, 2025. "COBOLing Together UI Benefits: How Delays in Fiscal Stabilizers Affect Aggregate Consumption," FRB Atlanta Working Paper 2025-14, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:101969
    DOI: 10.29338/wp2025-14
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    File URL: https://www.atlantafed.org/-/media/documents/research/publications/wp/2025/10/16/14-coboling-together-ui-benefits-how-delays-in-fiscal-stabilizers-affect-aggregate-consumption.pdf
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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
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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