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The Jobs Effect of Ending Pandemic Unemployment Benefits: A State-Level Analysis

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Abstract

This paper uses the asynchronous cessation of emergency unemployment benefits (EUB) in 2021 to investigate the jobs impact of ending unemployment benefits. While some states stopped providing EUB in September, others stopped as early as June. Using the cessation month as an instrument, we estimate the effect on employment of reducing unemployment rolls. In the second month following a state’s program termination, for every 100 person reduction in beneficiaries, state employment causally increased by about 27 persons. The effect is statistically different from zero and robust to a wide array of alternative specifications.

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  • Iris Arbogast & Bill Dupor, 2022. "The Jobs Effect of Ending Pandemic Unemployment Benefits: A State-Level Analysis," Working Papers 2022-010, Federal Reserve Bank of St. Louis, revised 08 Feb 2023.
    • Handle: RePEc:fip:fedlwp:94105
    DOI: 10.20955/wp.2022.010
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    1. Iris Arbogast & Bill Dupor, 2022. "Increasing Employment by Halting Pandemic Unemployment Benefits," Review, Federal Reserve Bank of St. Louis, vol. 104(3), pages 166-177, July.
    2. Henry S. Farber & Jesse Rothstein & Robert G. Valletta, 2015. "The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out," American Economic Review, American Economic Association, vol. 105(5), pages 171-176, May.
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    JEL classification:

    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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