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

15 Pages Posted: 31 Jan 2015

See all articles by Henry S. Farber

Henry S. Farber

Princeton University; National Bureau of Economic Research (NBER)

Jesse Rothstein

University of California, Berkeley, The Richard & Rhoda Goldman School of Public Policy; University of California, Berkeley, College of Letters & Science, Department of Economics; National Bureau of Economic Research (NBER)

Robert G. Valletta

Federal Reserve Bank of San Francisco; IZA Institute of Labor Economics

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.

Keywords: extended unemployment benefits, job search, labor force

JEL Classification: J64, J65

Suggested Citation

Farber, Henry S. and Rothstein, Jesse and Valletta, Robert G., The Effect of Extended Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out. IZA Discussion Paper No. 8784. Available at SSRN: https://ssrn.com/abstract=2558363

Henry S. Farber (Contact Author)

Princeton University ( email )

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Jesse Rothstein

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Robert G. Valletta

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