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The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out

Author

Listed:
  • Farber, Henry S

    () (Princeton University)

  • Rothstein, Jesse

    () (University of California, Berkeley)

  • Valletta, Robert G.

    () (Federal Reserve Bank of San Francisco)

Abstract

Unemployment Insurance benefit durations were extended during the Great Recession, reaching 99 weeks for most recipients. The extensions were rolled back and eventually terminated by the end of 2013. Using matched CPS data from 2008-2014, we estimate the effect of extended benefits on unemployment exits separately during the earlier period of benefit expansion and the later period of rollback. In both periods, we find little or no effect on job-finding but a reduction in labor force exits due to benefit availability. We estimate that the rollbacks reduced the labor force participation rate by about 0.1 percentage point in early 2014.

Suggested Citation

  • Farber, Henry S & Rothstein, Jesse & Valletta, Robert G., 2015. "The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out," IZA Discussion Papers 8784, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp8784
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    References listed on IDEAS

    as
    1. Henry S. Farber & Robert G. Valletta, 2015. "Do Extended Unemployment Benefits Lengthen Unemployment Spells?: Evidence from Recent Cycles in the U.S. Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 873-909.
    2. Hagedorn, Marcus & Karahan, Fatih & Manovskii, Iourii & Mitman, Kurt, 2013. "Unemployment benefits and unemployment in the Great Recession: the role of macro effects," Staff Reports 646, Federal Reserve Bank of New York, revised 01 Feb 2015.
    3. David Card & Raj Chetty & Andrea Weber, 2007. "The Spike at Benefit Exhaustion: Leaving the Unemployment System or Starting a New Job?," American Economic Review, American Economic Association, vol. 97(2), pages 113-118, May.
    4. Kory Kroft & Matthew J. Notowidigdo, 2016. "Should Unemployment Insurance Vary with the Unemployment Rate? Theory and Evidence," Review of Economic Studies, Oxford University Press, vol. 83(3), pages 1092-1124.
    5. Abowd, John M & Zellner, Arnold, 1985. "Estimating Gross Labor-Force Flows," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(3), pages 254-283, June.
    6. Jesse Rothstein, 2011. "Unemployment Insurance and Job Search in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 143-213.
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    Cited by:

    1. Boone, Christopher & Dube, Arindrajit & Goodman, Lucas & Kaplan, Ethan, 2016. "Unemployment Insurance Generosity and Aggregate Employment," IZA Discussion Papers 10439, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    extended unemployment benefits; job search; labor force;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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