[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/11290.html
   My bibliography  Save this paper

Interpreting Recent Quasi-Experimental Evidence on the Effects of Unemployment Benefit Extensions

Author

Listed:
  • Mitman, Kurt
  • Hagedorn, Marcus
  • Manovskii, Iourii
Abstract
We critically review recent methodological and empirical contributions aiming to provide a comprehensive assessment of the effects of unemployment benefit extensions on the labor market and attempt to reconcile their apparently disparate findings. We describe two key challenges facing these studies - the endogeneity of benefit durations to labor market conditions and isolating true effects of actual policies from agents' responses to expectations of future policy changes. Marinescu (2015) employs a methodology that does not attempt to address these challenges. A more innovative approach in Coglianese (2015) and Chodorow-Reich and Karabarbounis (2016) attempts to overcome these challenges by exploiting a sampling error in unemployment rates as an exogenous variation. Unfortunately, we find that this approach falls prey to the very problems it aims to overcome and it appears unlikely that the fundamental bias at the core of this approach can be overcome. We find more promising the approach based on unexpected policy changes as in the recent contributions by Johnston and Mas (2015) and Hagedorn, Manovskii and Mitman (2015). This approach by design addresses the problem of benefit endogeneity. It does not, however, fully address the effects of expectations and generally yields a lower bound on the actual effects of policies.

Suggested Citation

  • Mitman, Kurt & Hagedorn, Marcus & Manovskii, Iourii, 2016. "Interpreting Recent Quasi-Experimental Evidence on the Effects of Unemployment Benefit Extensions," CEPR Discussion Papers 11290, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11290
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP11290
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Carling, Kenneth & Holmlund, Bertil & Vejsiu, Altin, 2001. "Do Benefit Cuts Boost Job Finding? Swedish Evidence from the 1990s," Economic Journal, Royal Economic Society, vol. 111(474), pages 766-790, October.
    2. Gabriel Chodorow-Reich & Loukas Karabarbounis, 2016. "The Limited Macroeconomic Effects of Unemployment Benefit Extensions," NBER Working Papers 22163, National Bureau of Economic Research, Inc.
    3. Marinescu, Ioana, 2017. "The general equilibrium impacts of unemployment insurance: Evidence from a large online job board," Journal of Public Economics, Elsevier, vol. 150(C), pages 14-29.
    4. Lars Ljungqvist & Thomas J. Sargent, 1998. "The European Unemployment Dilemma," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 514-550, June.
    5. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, January.
    6. Marcus Hagedorn & Iourii Manovskii & Kurt Mitman, 2015. "The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?," NBER Working Papers 20884, National Bureau of Economic Research, Inc.
    7. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
    8. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
    9. Andrew C. Johnston & Alexandre Mas, 2018. "Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut," Journal of Political Economy, University of Chicago Press, vol. 126(6), pages 2480-2522.
    10. Krause, Michael U. & Uhlig, Harald, 2012. "Transitions in the German labor market: Structure and crisis," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 64-79.
    11. Card, David & Levine, Phillip B., 2000. "Extended benefits and the duration of UI spells: evidence from the New Jersey extended benefit program," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 107-138, October.
    12. Thomas J. Holmes, 1998. "The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 667-705, August.
    13. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
    14. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392, Elsevier.
    15. Marcus Hagedorn & Fatih Karahan & Iourii Manovskii & Kurt Mitman, 2013. "Unemployment Benefits and Unemployment in the Great Recession: The Role of Macro Effects," NBER Working Papers 19499, National Bureau of Economic Research, Inc.
    16. Jushan Bai, 2009. "Panel Data Models With Interactive Fixed Effects," Econometrica, Econometric Society, vol. 77(4), pages 1229-1279, July.
    17. Arindrajit Dube & T. William Lester & Michael Reich, 2010. "Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 945-964, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jochen Mankart & Rigas Oikonomou, 2017. "Household Search and the Aggregate Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(4), pages 1735-1788.
    2. Marinescu, Ioana, 2017. "The general equilibrium impacts of unemployment insurance: Evidence from a large online job board," Journal of Public Economics, Elsevier, vol. 150(C), pages 14-29.
    3. Brown, Alessio J.G. & Kohlbrecher, Britta & Merkl, Christian & Snower, Dennis J., 2021. "The effects of productivity and benefits on unemployment: Breaking the link," Economic Modelling, Elsevier, vol. 94(C), pages 967-980.
    4. Aiwei Huang, 2021. "To What Extent do Labor Market Outcomes respond to UI Extensions?," Papers 2104.12387, arXiv.org.
    5. Gustavo de Souza & Andre Luduvice, 2022. "Optimal Unemployment Insurance Requirements," Working Paper Series WP 2022-45, Federal Reserve Bank of Chicago.
    6. Camille Landais & Pascal Michaillat & Emmanuel Saez, 2018. "A Macroeconomic Approach to Optimal Unemployment Insurance: Applications," American Economic Journal: Economic Policy, American Economic Association, vol. 10(2), pages 182-216, May.
    7. Steven Dieterle & Otávio Bartalotti & Quentin Brummet, 2020. "Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement-Error-Corrected Regression Discontinuity Approach," American Economic Journal: Economic Policy, American Economic Association, vol. 12(2), pages 84-114, May.
    8. Christopher Boone & Arindrajit Dube & Lucas Goodman & Ethan Kaplan, 2021. "Unemployment Insurance Generosity and Aggregate Employment," American Economic Journal: Economic Policy, American Economic Association, vol. 13(2), pages 58-99, May.
    9. Andrew Figura & David Ratner, 2017. "How Large were the Effects of Emergency and Extended Benefits on Unemployment during the Great Recession and its Aftermath?," Finance and Economics Discussion Series 2017-068, Board of Governors of the Federal Reserve System (U.S.).
    10. Bachmann, Rüdiger & Gödl-Hanisch, Isabel & Sims, Eric R., 2022. "Identifying monetary policy shocks using the central bank’s information set," Journal of Economic Dynamics and Control, Elsevier, vol. 145(C).
    11. Marinescu, Ioana, 2019. "Reprint of: The general equilibrium impacts of unemployment insurance: Evidence from a large online job board," Journal of Public Economics, Elsevier, vol. 171(C), pages 70-85.
    12. Mitman, Kurt & Rabinovich, Stanislav, 2019. "Do Unemployment Benefit Extensions Explain the Emergence of Jobless Recoveries?," IZA Discussion Papers 12365, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Steven Dieterle & Otávio Bartalotti & Quentin Brummet, 2020. "Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement-Error-Corrected Regression Discontinuity Approach," American Economic Journal: Economic Policy, American Economic Association, vol. 12(2), pages 84-114, May.
    2. Brown, Alessio J.G. & Kohlbrecher, Britta & Merkl, Christian & Snower, Dennis J., 2021. "The effects of productivity and benefits on unemployment: Breaking the link," Economic Modelling, Elsevier, vol. 94(C), pages 967-980.
    3. Aiwei Huang, 2021. "To What Extent do Labor Market Outcomes respond to UI Extensions?," Papers 2104.12387, arXiv.org.
    4. Fredriksson, Peter & Söderström, Martin, 2020. "The equilibrium impact of unemployment insurance on unemployment: Evidence from a non-linear policy rule," Journal of Public Economics, Elsevier, vol. 187(C).
    5. Camille Landais & Pascal Michaillat & Emmanuel Saez, 2018. "A Macroeconomic Approach to Optimal Unemployment Insurance: Applications," American Economic Journal: Economic Policy, American Economic Association, vol. 10(2), pages 182-216, May.
    6. Gałecka-Burdziak, Ewa & Góra, Marek & Jessen, Jonas & Jessen, Robin & Kluve, Jochen, 2021. "The effects of shortening potential benefit duration: Evidence from regional cut-offs and a policy reform," Ruhr Economic Papers 911, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. Andrew C. Johnston & Alexandre Mas, 2018. "Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut," Journal of Political Economy, University of Chicago Press, vol. 126(6), pages 2480-2522.
    8. Johannes F. Schmieder & Till von Wachter, 2016. "The Effects of Unemployment Insurance Benefits: New Evidence and Interpretation," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 547-581, October.
    9. Jessen, Jonas & Jessen, Robin & Galecka-Burdziak, Ewa & Góra, Marek & Kluve, Jochen, 2023. "The Micro and Macro Effects of Changes in the Potential Benefit Duration," IZA Discussion Papers 15978, Institute of Labor Economics (IZA).
    10. Gabriel Chodorow-Reich & Loukas Karabarbounis, 2016. "The Limited Macroeconomic Effects of Unemployment Benefit Extensions," NBER Working Papers 22163, National Bureau of Economic Research, Inc.
    11. Albertini, Julien & Fairise, Xavier & Terriau, Anthony, 2023. "Unemployment insurance, recalls, and experience rating," Journal of Macroeconomics, Elsevier, vol. 75(C).
    12. Dieterle, Steven & Bartalotti, Otávio C. & Brummet, Quentin O., 2016. "Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement Error-Corrected RD Approach," Staff General Research Papers Archive 3392, Iowa State University, Department of Economics.
    13. Fatih Karahan & Kurt Mitman & Brendan Moore, 2019. "Micro and Macro Effects of UI Policies: Evidence from Missouri," Staff Reports 905, Federal Reserve Bank of New York.
    14. Dieterle, Steven & Bartalotti, Otávio C. & Brummet, Quentin O., 2016. "Revisiting the Effects of Unemployment Insurance Extensions on Unemployment: A Measurement Error-Corrected RD Approach," ISU General Staff Papers 201604210700001002, Iowa State University, Department of Economics.
    15. Marco Di Maggio & Amir Kermani, 2016. "The Importance of Unemployment Insurance as an Automatic Stabilizer," NBER Working Papers 22625, National Bureau of Economic Research, Inc.
    16. Karahan, Fatih & Mitman, Kurt & Moore, Brendan, 2019. "Individual and Market-Level Effects of UI Policies: Evidence from Missouri," IZA Discussion Papers 12805, Institute of Labor Economics (IZA).
    17. Christopher Boone & Arindrajit Dube & Lucas Goodman & Ethan Kaplan, 2021. "Unemployment Insurance Generosity and Aggregate Employment," American Economic Journal: Economic Policy, American Economic Association, vol. 13(2), pages 58-99, May.
    18. Pei, Yun & Xie, Zoe, 2021. "A quantitative theory of time-consistent unemployment insurance," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 848-870.
    19. Marinescu, Ioana, 2017. "The general equilibrium impacts of unemployment insurance: Evidence from a large online job board," Journal of Public Economics, Elsevier, vol. 150(C), pages 14-29.
    20. Tom Krebs & Martin Scheffel, 2016. "Labor Market Institutions and the Cost of Recessions," CESifo Working Paper Series 6262, CESifo.

    More about this item

    Keywords

    Unemployment insurance; Unemployment;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:11290. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.