Student Faculty Macro Lunch: "Macroeconomic Effects of UI Extensions at Short and Long Durations"

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Submitted by Brandon Eltiste on February 02, 2023
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597 Evans Hall
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Time:
Tuesday, April 4, 2023 - 12:00
About this Event

Emi Nakamura, Professor, UC Berkeley Economics

We study the macroeconomic effects of unemployment insurance (UI) benefit extensions in the United States at short and long durations. To do this, we develop a new state level dataset on trigger variables for UI extensions and a "UI benefit calculator" based on detailed legislative and administrative sources spanning five decades. Our identification approach exploits variation across states in the options governing the Extended Benefits program. Our estimates imply that UI extensions during time periods when UI benefit durations are already long -- such as in the Great Recession -- have minimal effects. However, UI extensions when initial durations are shorter have substantial effects on the unemployment rate and the number of people receiving UI. We develop an equilibrium search-and-matching model that incorporates realistic features of the UI system. The calibration that best matches our empirical findings implies small general equilibrium effects of UI extensions.