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A Quasi-Experimental Approach to the Effects of Unemployment Insurance

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  • Bruce D. Meyer

Abstract

This paper uses the natural experiment provided by periodic increases in state benefit levels to estimate the effects of higher unemployment insurance benefits, individuals who filed just before and just after sixteen benefit increases are compared using data from five states during 1979-1984. The increases, which average about 9 percent, are found to increase the period of unemployment insurance receipt by about one week. This effect is precisely estimated and found using several approaches. the incidence of layoffs resulting in unemployment insurance claims is unaffected by the increases. The evidence does not suggest that higher benefits lead to better jobs. In fact, the post-unemployment earnings of individuals receiving higher benefits are estimated to fall slightly, but the estimates are imprecise.

Suggested Citation

  • Bruce D. Meyer, 1989. "A Quasi-Experimental Approach to the Effects of Unemployment Insurance," NBER Working Papers 3159, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3159 Note: LS
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    References listed on IDEAS

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    1. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, vol. 73(4), pages 541-559, September.
    2. Woodbury, Stephen A & Spiegelman, Robert G, 1987. "Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois," American Economic Review, American Economic Association, vol. 77(4), pages 513-530, September.
    3. Topel, Robert H, 1984. "Experience Rating of Unemployment Insurance and the Incidence of Unemployment," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 61-90, April.
    4. repec:pri:indrel:dsp017m01bk69x is not listed on IDEAS
    5. Solon, Gary R, 1985. "Work Incentive Effects of Taxing Unemployment Benefits," Econometrica, Econometric Society, vol. 53(2), pages 295-306, March.
    6. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 975-1028, September.
    7. Frank Brechling, 1977. "Unemployment Insurance Taxes and Labor Turnover: Summary of Theoretical Findings," ILR Review, Cornell University, ILR School, vol. 30(4), pages 483-492, July.
    8. Martin S. Feldstein, 1975. "The Importance of Temporary Layoffs: An Empirical Analysis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(3), pages 725-745.
    9. repec:fth:prinin:144 is not listed on IDEAS
    10. Alan L. Gustman, 1980. "Analyzing the Relation of Unemployment Insurance to Unemployment," NBER Working Papers 0512, National Bureau of Economic Research, Inc.
    11. Lawrence F. Katz & Bruce D. Meyer, 1990. "Unemployment Insurance, Recall Expectations, and Unemployment Outcomes," The Quarterly Journal of Economics, Oxford University Press, vol. 105(4), pages 973-1002.
    12. Gary Solon, 1981. "Unemployment Insurance, Filing Delay, and Unemployment Duration," Working Papers 524, Princeton University, Department of Economics, Industrial Relations Section..
    13. Ronald G. Ehrenberg, 1985. "Workers' Compensation, Wages, and the Risk of Injury," NBER Working Papers 1538, National Bureau of Economic Research, Inc.
    14. Mortensen, Dale T, 1970. "Job Search, the Duration of Unemployment, and the Phillips Curve," American Economic Review, American Economic Association, vol. 60(5), pages 847-862, December.
    15. Feldstein, Martin S, 1978. "The Effect of Unemployment Insurance on Temporary Layoff Unemployment," American Economic Review, American Economic Association, vol. 68(5), pages 834-846, December.
    16. Frank Brechling, 1981. "Layoffs and Unemployment Insurance," NBER Chapters,in: Studies in Labor Markets, pages 187-208 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Acemoglu, Daron & Shimer, Robert, 2000. "Productivity gains from unemployment insurance," European Economic Review, Elsevier, vol. 44(7), pages 1195-1224, June.
    2. Carling, Kenneth & Holmlund, Bertil & Vejsiu, Altin, 2001. "Do Benefit Cuts Boost Job Finding? Swedish Evidence from the 1990s," Economic Journal, Royal Economic Society, vol. 111(474), pages 766-790, October.
    3. Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
    4. Cockx, Bart & Ridder, Geert, 2001. "Social Employment of Welfare Recipients in Belgium: An Evaluation," Economic Journal, Royal Economic Society, vol. 111(470), pages 322-352, April.
    5. Knut Roed & Tao Zhang, 2003. "Does Unemployment Compensation Affect Unemployment Duration?," Economic Journal, Royal Economic Society, vol. 113(484), pages 190-206, January.
    6. Alan B. Krueger & Jorn-Steffen Pischke, 1997. "Observations and Conjectures on the U.S. Employment Miracle," Working Papers 769, Princeton University, Department of Economics, Industrial Relations Section..
    7. Courtney Coile & Jonathan Gruber, 2001. "Social Security Incentives for Retirement," NBER Chapters,in: Themes in the Economics of Aging, pages 311-354 National Bureau of Economic Research, Inc.
    8. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-161, April.
    9. Bruce D. Meyer, 1992. "Policy Lessons from the U.S. Unemployment Experiments," NBER Working Papers 4197, National Bureau of Economic Research, Inc.
    10. Meyer, Bruce D & Viscusi, W Kip & Durbin, David L, 1995. "Workers' Compensation and Injury Duration: Evidence from a Natural Experiment," American Economic Review, American Economic Association, vol. 85(3), pages 322-340, June.
    11. Røed, Knut & Jensen, Peter & Thoursie, Anna, 2002. "Unemployment Duration, Incentives and Institutions - A Micro-Econometric Analysis Based on Scandinavian Data," Working Paper Series 3/2002, Stockholm University, Swedish Institute for Social Research.
    12. Alan B. Krueger, 1990. "Workers' Compensation Insurance and the Duration of Workplace Injuries," NBER Working Papers 3253, National Bureau of Economic Research, Inc.
    13. Kelly D. Edmiston, 2006. "Workers' Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145.
    14. Patricia M. Anderson & Bruce D. Meyer, 1994. "The Effects of Unemployment Insurance Taxes and Benefits on Layoffs Using Firm and Individual Data," NBER Working Papers 4960, National Bureau of Economic Research, Inc.
    15. Janet Currie & Jonathan Gruber, 1994. "Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women," NBER Working Papers 4644, National Bureau of Economic Research, Inc.
    16. John H. Tyler & Richard J. Murnane & John B. Willett, 1998. "Estimating the Impact of the GED on the Earnings of Young Dropouts Using a Series of Natural Experiments," NBER Working Papers 6391, National Bureau of Economic Research, Inc.
    17. 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.
    18. Peter Diamond & Jonathan Gruber, 1997. "Social Security and Retirement in the U.S," NBER Working Papers 6097, National Bureau of Economic Research, Inc.
    19. Jonathan Gruber & Brigitte C. Madrian, 1995. "Non-Employment and Health Insurance Coverage," NBER Working Papers 5228, National Bureau of Economic Research, Inc.
    20. Peter Diamond & Jonathan Gruber, 1999. "Social Security and Retirement in the United States," NBER Chapters,in: Social Security and Retirement around the World, pages 437-473 National Bureau of Economic Research, Inc.
    21. Jonathan Gruber, 1994. "The Consumption Smoothing Benefits of Unemployment Insurance," NBER Working Papers 4750, National Bureau of Economic Research, Inc.
    22. Ping Yan, 2011. "Optimal Unemployment Insurance with Endogenous Search Effort," Annals of Economics and Finance, Society for AEF, vol. 12(2), pages 347-369, November.

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