Delayed Collection of Unemployment Insurance in Recessions

52 Pages Posted: 1 Jul 2019

See all articles by Zoe Xie

Zoe Xie

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Date Written: 2019-06-01

Abstract

Using variations in unemployment insurance policies over time and across U.S. states, this paper provides evidence that allowing unemployed workers to delay the collection of benefits increases their job-finding rate. In a model with discrete job take-up decisions, benefit entitlement, wage-indexed benefits, and heterogeneous job types, I demonstrate that the policy can increase an unemployed worker's willingness to work, even though more benefits in general reduce the relative value of employment. In a calibrated quantitative model, I find that allowing delayed benefit collection increases the overall job finding rates and may lower the unemployment rate both in a steady state stationary economy and over a transition path during 2008--12.

Keywords: health, frailty index, life cycle profiles

JEL Classification: E24, J65

Suggested Citation

Xie, Zoe, Delayed Collection of Unemployment Insurance in Recessions (2019-06-01). FRB Atlanta Working Paper No. 2019-14. Available at SSRN: https://ssrn.com/abstract=3411945 or http://dx.doi.org/10.29338/wp2019-14

Zoe Xie (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

HOME PAGE: http://zoexie.weebly.com

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