TY - JOUR
T1 - The macro effects of unemployment benefit extensions
T2 - A measurement error approach
AU - Chodorow-Reich, Gabriel
AU - Coglianese, John
AU - Karabarbounis, Loukas
N1 - Publisher Copyright:
© 2018 The Author(s).
PY - 2019/2/1
Y1 - 2019/2/1
N2 - By how much does an extension of unemployment benefits affect macroeconomic outcomes such as unemployment? Answering this question is challenging because U.S. law extends benefits for states experiencing high unemployment. We use data revisions to decompose the variation in the duration of benefits into the part coming from actual differences in economic conditions and the part coming from measurement error in the real-time data used to determine benefit extensions. Using only the variation coming from measurement error, we find that benefit extensions have a limited influence on state-level macroeconomic outcomes. We apply our estimates to the increase in the duration of benefits during the Great Recession and find that they increased the unemployment rate by at most 0.3 percentage point.
AB - By how much does an extension of unemployment benefits affect macroeconomic outcomes such as unemployment? Answering this question is challenging because U.S. law extends benefits for states experiencing high unemployment. We use data revisions to decompose the variation in the duration of benefits into the part coming from actual differences in economic conditions and the part coming from measurement error in the real-time data used to determine benefit extensions. Using only the variation coming from measurement error, we find that benefit extensions have a limited influence on state-level macroeconomic outcomes. We apply our estimates to the increase in the duration of benefits during the Great Recession and find that they increased the unemployment rate by at most 0.3 percentage point.
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U2 - 10.1093/qje/qjy018
DO - 10.1093/qje/qjy018
M3 - Article
AN - SCOPUS:85063574892
SN - 0033-5533
VL - 134
SP - 227
EP - 279
JO - Quarterly Journal of Economics
JF - Quarterly Journal of Economics
IS - 1
ER -