Unemployment Insurance (UI) Benefit Generosity and Labor Supply from 2002 to 2020: Evidence from California UI Records

This paper obtains comparable estimates of the effect of unemployment insurance (UI) benefits on labor supply throughout the unemployment spell and over the business cycle using a regression kink design and 20 years of administrative data from California. For a given unemployment duration, the behav...

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Bibliographic Details
Published in:Journal of labor economics 2024-04, Vol.42 (S1), p.S379-S416
Main Authors: Bell, Alex, Hedin, T. J., Schnorr, Geoffrey, von Wachter, Till
Format: Article
Language:English
Subjects:
Business cycles
COVID-19
Labor economics
Labor supply
Pandemics
Unemployment insurance
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Summary:This paper obtains comparable estimates of the effect of unemployment insurance (UI) benefits on labor supply throughout the unemployment spell and over the business cycle using a regression kink design and 20 years of administrative data from California. For a given unemployment duration, the behavioral effect of UI benefit levels on labor supply does not vary with the business cycle from 2002 to 2019. However, due to increased coverage from extensions in benefit durations, the duration elasticity of UI benefits rises during recessions. The behavioral effect during the start of the COVID-19 pandemic is substantially lower at all unemployment durations.
ISSN:0734-306X
1537-5307
DOI:10.1086/728808