How Large Were the Effects of Emergency and Extended Benefits on Unemployment During the Great Recession and its Aftermath?

31 Pages Posted: 29 Jun 2017

See all articles by Andrew Figura

Andrew Figura

Board of Governors of the Federal Reserve System - Macroeconomic Analysis Section

David Ratner

Board of Governors of the Federal Reserve System

Date Written: June, 2017

Abstract

This paper presents estimates of the effect of unemployment benefit extensions during the Great Recession on unemployment and labor force participation. Unlike many recent studies of this subject, our estimates, following the work of Hagedorn, Karahan, Manovskii, and Mitman (2016), are inclusive of the effects of benefit extensions on employer, as well as, worker behavior. To identify the effect of benefit extensions, we use plausibly exogenous changes in the rules governing benefit extensions and their differential effects on the maximum duration of benefits across states. We find that the effect of benefit extensions is likely modest, with a 90 percent confidence interval of the effect on the unemployment rate ranging from 0 to percentage point.

JEL Classification: J6, E24

Suggested Citation

Figura, Andrew and Ratner, David, How Large Were the Effects of Emergency and Extended Benefits on Unemployment During the Great Recession and its Aftermath? (June, 2017). Available at SSRN: https://ssrn.com/abstract=2994713 or http://dx.doi.org/10.17016/FEDS.2017.068

Andrew Figura (Contact Author)

Board of Governors of the Federal Reserve System - Macroeconomic Analysis Section ( email )

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David Ratner

Board of Governors of the Federal Reserve System ( email )

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