Unemployment Insurance: New Findings on Reporting, Effects, and Intergenerational Impacts
Paper Session
Sunday, Jan. 7, 2024 8:00 AM - 10:00 AM (CST)
- Chair: Till von Wachter, University of California-Los Angeles
The Effect of Unemployment Insurance for Self-Employed and Marginally-Attached Workers
Abstract
We study the temporary extension of Unemployment Insurance (UI) benefits to groups of workers typically excluded from the UI system–including gig workers, the self-employed more broadly, and labor market entrants with limited work experience–implemented as part of the United States policy response to the 2020 COVID-19 crisis. We document that, although enacted at the federal level, the state level implementation resulted in large differences in the roll-out of benefits across jurisdictions in practice. We exploit this cross-state variation to estimate the causal impacts of these UI expansions on the labor supply, education choices, and mortality of affected groups using a spatial regression discontinuity design. We find that every additional dollar in UI payments received by self-employed workers led to a 28 cent reduction in their earnings, and find bigger reductions among platform-based gig workers of 48 cents. Our preferred explanation is that responses were larger among these gig workers because delivery remained a viable work option even as many other sectors were largely shut down by the pandemic. We find that the reduction in work done by older gig workers led to reductions in their mortality during the pandemic that can be plausibly linked to reduced exposure to COVID though work–but find no effect among the self-employed more broadly.Unemployment Insurance, Starting Salaries, and Jobs: Evidence from Multi-State Firms
Abstract
We study the labor market effects of permanent 23-50% reductions in unemployment insurance benefits available in seven states. Leveraging linked firm-establishment data, we find that establishments based in reform states experience 1.5-2.4% faster employment growth relative to the same firm’s establishments in other states. Using a similar multi-state firm design, starting salaries are 1.8-7.2% lower in reform states and posted salaries for the same job fall by 1.4-5.5%. These labor supply shocks yield an average labor demand elasticity of -1.0. Our results reveal a substantial decline in match quality and worker bargaining power as UI benefits become less generous.Intergenerational Effects of Unemployment Insurance: Evidence from Tax Data
Abstract
Parental job loss can negatively affect children in a number of ways, but little is known about whether unemployment insurance (UI) helps insulate children from some of these harms. Unemployment insurance generosity is determined based on state-level policies and whether unemployment rates exceed predetermined thresholds. We estimate the effect of increased UI generosity on the long-run education and labor market outcomes for the children of displaced workers using detailed administrative tax records. Increasing maximum total UI benefits by $10,000 for parents increases their children’s earnings by $224 at age 26 and their children’s tax liability by $44. Approximately two-thirds of the cost of expanding UI is recouped from children’s future tax payments. We find that increasing UI generosity protects children from the harm of parental job loss and has important consequences for children’s long-run outcomes.Discussant(s)
Till von Wachter
,
University of California-Los Angeles
Andrew Johnston
,
University of California-Merced
Maxim Massenkoff
,
Naval Postgraduate School
Derek Wu
,
University of Virginia
JEL Classifications
- J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers
- H5 - National Government Expenditures and Related Policies