Between a Rock and a Hard Place: The Costs and Benefits of Expanded Unemployment Insurance Benefits

38 Pages Posted: 9 Jan 2024

See all articles by Naser Hamdi

Naser Hamdi

Equifax, Inc.

Ankit Kalda

Indiana University - Kelley School of Business - Department of Finance

David Sovich

University of Kentucky - Gatton College of Business and Economics

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Abstract

We examine how the withdrawal of the largest expansion of unemployment insurance (UI) benefits in U.S. history affected job-finding, the demand for other government assistance, and defaults on credit products. Using administrative UI data merged with applications for Medicaid and SNAP and credit bureau records, we show that the withdrawal of expanded UI benefits led to an increase in job-finding that was most pronounced among credit-constrained individuals. The cost-savings from higher job-finding came at the expense of increased demand for Medicaid and SNAP and higher defaults. Our results highlight an important interaction between UI and other social insurance programs.

Keywords: Unemployment Insurance, Social Insurance, COVID-19, job search, default

Suggested Citation

Hamdi, Naser and Kalda, Ankit and Sovich, David, Between a Rock and a Hard Place: The Costs and Benefits of Expanded Unemployment Insurance Benefits. Available at SSRN: https://ssrn.com/abstract=4678461 or http://dx.doi.org/10.2139/ssrn.4678461

Naser Hamdi

Equifax, Inc. ( email )

Atlanta, GA
United States

Ankit Kalda

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

David Sovich (Contact Author)

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States

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