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Effects of extended unemployment insurance benefits: evidence from the monthly CPS

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  • Shigeru Fujita

Abstract

This paper attempts to quantify the effects of extended unemployment insurance benefits in recent years. Using the monthly Current Population Survey, I estimate unemployment-to-employment (UE) hazard function and unemployment-to-inactivity (UN) hazard function for male workers. The estimated hazard functions for the period of 2004-2007, during which no extended benefits were available, exhibit patterns consistent with the expiration of regular benefits at 26 weeks. These patterns largely disappear from the hazard functions for the period of 2009-2010, during which largescale extended benefits had become available. I conduct counterfactual experiments in which the estimated hazard functions for 2009-2010 are replaced by the counterfactual hazard functions whose patterns are inferred from those for the 2004-2007 period. The experiments suggest that extended benefits in recent years have raised male workers’ unemployment rate by 1.2 percentage points with a 90% confidence interval of 0.8 to 1.8 percentage points. The increases in the unemployment rate largely come from the effects on the UE hazard function rather than the UN hazard function.

Suggested Citation

  • Shigeru Fujita, 2011. "Effects of extended unemployment insurance benefits: evidence from the monthly CPS," Working Papers 10-35, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:10-35
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    File URL: http://www.philadelphiafed.org/research-and-data/publications/working-papers/2010/wp10-35R.pdf
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    Cited by:

    1. Robert E. Hall, 2016. "Macroeconomics of Persistent Slumps," NBER Working Papers 22230, National Bureau of Economic Research, Inc.
    2. Robert E. Hall, 2014. "Quantifying the Lasting Harm to the U.S. Economy from the Financial Crisis," NBER Chapters,in: NBER Macroeconomics Annual 2014, Volume 29, pages 71-128 National Bureau of Economic Research, Inc.
    3. repec:aea:aejmac:v:10:y:2018:i:1:p:1-32 is not listed on IDEAS
    4. Robert E. Hall & Sam Schulhofer-Wohl, 2018. "Measuring Job-Finding Rates and Matching Efficiency with Heterogeneous Job-Seekers," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 1-32, January.
    5. Dieterle, Steven & Bartalotti, Otávio C. & Brummet, Quentin O., 2016. "Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement Error-Corrected RD Approach," Staff General Research Papers Archive 3392, Iowa State University, Department of Economics.
    6. Peter Diamond, 2013. "Cyclical Unemployment, Structural Unemployment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 410-455, August.
    7. repec:eee:macchp:v2-2131 is not listed on IDEAS
    8. Willem Van Zandweghe, 2012. "Interpreting the recent decline in labor force participation," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 5-34.
    9. Julien Albertini & Arthur Poirier, 2015. "Unemployment Benefit Extension at the Zero Lower Bound," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 733-751, October.
    10. Sam Schulhofer-Wohl & Robert Hall, 2014. "Measuring Matching Efficiency with Heterogeneous Jobseekers," 2014 Meeting Papers 368, Society for Economic Dynamics.
    11. Mikhail Simutin & JessieJiaxu Wang & Lars Kuehn, 2014. "A Labor Capital Asset Pricing Model," 2014 Meeting Papers 695, Society for Economic Dynamics.
    12. Charles A. Fleischman & John M. Roberts, 2011. "From many series, one cycle: improved estimates of the business cycle from a multivariate unobserved components model," Finance and Economics Discussion Series 2011-46, Board of Governors of the Federal Reserve System (U.S.).
    13. Julien Albertini & Arthur Poirier, 2014. "Unemployment benefits extensions at the zero lower bound on nominal interest rate," SFB 649 Discussion Papers SFB649DP2014-019, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    14. Robert E. Hall, 2014. "High Discounts and High Unemployment," NBER Working Papers 19871, National Bureau of Economic Research, Inc.

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    Keywords

    Unemployment insurance ; Unemployment;

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