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The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013

Author

Listed:
  • David Card
  • Andrew Johnston
  • Pauline Leung
  • Alexandre Mas
  • Zhuan Pei

Abstract

We provide new evidence on the effect of the unemployment insurance (UI) weekly benefit amount on unemployment insurance spells based on administrative data from the state of Missouri covering the period 2003-2013. Identification comes from a regression kink design that exploits the quasi-experimental variation around the kink in the UI benefit schedule. We find that UI durations are more responsive to benefit levels during the recession and its aftermath, with an elasticity between 0.65 and 0.9 as compared to about 0.35 pre-recession.

Suggested Citation

  • David Card & Andrew Johnston & Pauline Leung & Alexandre Mas & Zhuan Pei, 2015. "The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013," NBER Working Papers 20869, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20869
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    References listed on IDEAS

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    1. David Card & David S. Lee & Zhuan Pei & Andrea Weber, 2015. "Inference on Causal Effects in a Generalized Regression Kink Design," Econometrica, Econometric Society, vol. 83, pages 2453-2483, November.
    2. David E. Card & David S. Lee & Zhuan Pei & Andrea Weber, 2012. "Nonlinear Policy Rules and the Identification and Estimation of Causal Effects in a Generalized Regression Kink Design," NRN working papers 2012-14, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    3. David Card & Andrew Johnston & Pauline Leung & Alexandre Mas & Zhuan Pei, 2015. "The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013," American Economic Review, American Economic Association, vol. 105(5), pages 126-130, 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. J. J. McCall, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, Oxford University Press, vol. 84(1), pages 113-126.
    6. Johannes F. Schmieder† & Till von Wachter & Stefan Bender, 2011. "The Effects Of Extended Unemployment Insurance Over The Business Cycle: Evidence From Regression Discontinuity Estimates Over Twenty Years," Boston University - Department of Economics - Working Papers Series WP2011-063, Boston University - Department of Economics.
    7. Ganong, Peter & Jäger, Simon, 2014. "A Permutation Test and Estimation Alternatives for the Regression Kink Design," IZA Discussion Papers 8282, Institute for the Study of Labor (IZA).
    8. Guido Imbens & Karthik Kalyanaraman, 2012. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 933-959.
    9. David Card & David S. Lee & Zhuan Pei, 2009. "Quasi-Experimental Identification and Estimation in the Regression Kink Design," Working Papers 1206, Princeton University, Department of Economics, Industrial Relations Section..
    10. Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2012. "The Effects of Extended Unemployment Insurance Over the Business Cycle: Evidence from Regression Discontinuity Estimates Over 20 Years," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 701-752.
    11. repec:taf:jnlasa:v:113:y:2018:i:522:p:494-504 is not listed on IDEAS
    12. Bruce D. Meyer & Wallace K. C. Mok, 2007. "Quasi-Experimental Evidence on the Effects of Unemployment Insurance from New York State," NBER Working Papers 12865, National Bureau of Economic Research, Inc.
    13. Peter Ganong & Simon Jäger, 2018. "A Permutation Test for the Regression Kink Design," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 113(522), pages 494-504, April.
    14. repec:hrv:faseco:34222894 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Manoli, Dayanand & Weber, Andrea, 2016. "The Effects of the Early Retirement Age on Retirement Decisions," IZA Discussion Papers 10154, Institute for the Study of Labor (IZA).
    2. Petri, Böckerman & Ohto, Kanninen & Ilpo, Suoniemi, 2018. "A Kink that Makes You Sick: The Effect of Sick Pay on Absence," MPRA Paper 87499, University Library of Munich, Germany.
    3. Doris, Aedin & O'Neill, Donal & Sweetman, Olive, 2017. "Does Reducing Unemployment Benefits During a Recession Reduce Youth Unemployment? Evidence from a 50% Cut in Unemployment Assistance," IZA Discussion Papers 10727, Institute for the Study of Labor (IZA).
    4. Krebs, Tom & Scheffel, Martin, 2016. "Labor Market Institutions and the Cost of Recessions," IZA Discussion Papers 10442, Institute for the Study of Labor (IZA).
    5. Bana, Sarah & Bedard, Kelly & Rossin-Slater, Maya, 2018. "The Impacts of Paid Family Leave Benefits: Regression Kink Evidence from California Administrative Data," IZA Discussion Papers 11381, Institute for the Study of Labor (IZA).
    6. Tom Krebs & Martin Scheffel, 2016. "Structural Reform in Germany," IMF Working Papers 16/96, International Monetary Fund.
    7. Yan Ji, 2017. "Job Search under Debt: Aggregate Implications of Student Loans," 2017 Meeting Papers 222, Society for Economic Dynamics.
    8. Yolanda F. Rebollo-Sanz & Nuria Rodriguez Planas, 2016. "When the Going Gets Tough... Financial Incentives, Duration of Unemployment and Job-Match Quality," Working Papers 16.11, Universidad Pablo de Olavide, Department of Economics.
    9. Wiljan van den Berge & Egbert Jongen & Karen van der Wiel, 2017. "Using Tax Deductions to Promote Lifelong Learning: Real and Shifting Responses," CPB Discussion Paper 353, CPB Netherlands Bureau for Economic Policy Analysis.
    10. David Card & Andrew Johnston & Pauline Leung & Alexandre Mas & Zhuan Pei, 2015. "The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003-2013," American Economic Review, American Economic Association, vol. 105(5), pages 126-130, May.
    11. Gordon Phillips & Kyle Herkenhoff, 2015. "The Impact of Consumer Credit Constraints on Earnings, Sorting, and Job Finding Rates of Displaced Workers," 2015 Meeting Papers 375, Society for Economic Dynamics.
    12. Damon Jones & Alexander M. Gelber & Daniel W. Sacks & Jae Song, 2017. "Using Kinked Budget Sets to Estimate Extensive Margin Responses: Method and Evidence from the Social Security Earnings Test," Working Papers 2017-034, Human Capital and Economic Opportunity Working Group.
    13. Martin Scheffel & Tom Krebs, 2017. "Labor Market Institutions and the Cost of Recessions," 2017 Meeting Papers 1438, Society for Economic Dynamics.
    14. David Card & David S. Lee & Zhuan Pei & Andrea Weber, 2017. "Regression Kink Design: Theory and Practice," Advances in Econometrics,in: Regression Discontinuity Designs, volume 38, pages 341-382 Emerald Publishing Ltd.
    15. Kyle Herkenhoff & Gordon Phillips & Ethan Cohen-Cole, 2016. "How Credit Constraints Impact Job Finding Rates, Sorting & Aggregate Output," Working Papers 16-25, Center for Economic Studies, U.S. Census Bureau.
    16. Alexander M. Gelber & Damon Jones & Daniel W. Sacks & Jae Song, 2017. "Using Non-Linear Budget Sets to Estimate Extensive Margin Responses: Method and Evidence from the Social Security Earnings Test," NBER Working Papers 23362, National Bureau of Economic Research, Inc.
    17. Cynthia Miller & Megan Millenky & Lisa Schwartz & Lisbeth Goble & Jillian Stein, "undated". "Building a Future: Interim Impact Findings from the YouthBuild Evaluation," Mathematica Policy Research Reports 6b0ac27603374f2c9a4aa82ab, Mathematica Policy Research.
    18. Andrew C. Johnston & Alexandre Mas, 2015. "Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut," Working Papers 590, Princeton University, Department of Economics, Industrial Relations Section..
    19. Saastamoinen, Antti & Kortelainen, Mika, 2018. "When does money stick in education? Evidence from a kinked grant rule," Working Papers 102, VATT Institute for Economic Research.
    20. Kyle F. Herkenhoff & Lee E. Ohanian, 2015. "The Impact of Foreclosure Delay on U.S. Employment," NBER Working Papers 21532, National Bureau of Economic Research, Inc.
    21. Sarah Bana & Kelly Bedard & Maya Rossin-Slater, 2018. "The Impacts of Paid Family Leave Benefits: Regression Kink Evidence from California Administrative Data," NBER Working Papers 24438, National Bureau of Economic Research, Inc.
    22. Pauline Leung & Christopher O'Leary, 2015. "Should UI Eligibility Be Expanded to Low-Earning Workers? Evidence on Employment, Transfer Receipt, and Income from Administrative Data," Working Papers 591, Princeton University, Department of Economics, Industrial Relations Section..
    23. Johannes F. Schmieder & Till von Wachter, 2016. "The Effects of Unemployment Insurance Benefits: New Evidence and Interpretation," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 547-581, October.
    24. Clemens, Michael A., 2017. "The Effect of Occupational Visas on Native Employment: Evidence from Labor Supply to Farm Jobs in the Great Recession," IZA Discussion Papers 10492, Institute for the Study of Labor (IZA).
    25. Schmieder, Johannes F. & Trenkle, Simon, 2016. "Disincentive Effects of Unemployment Benefits and the Role of Caseworkers," IZA Discussion Papers 9868, Institute for the Study of Labor (IZA).

    More about this item

    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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