The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle? Marcus Hagedorn, Iourii Manovskii, Kurt Mitman NBER Working Paper No. 20884 Issued in January 2015 NBER Program(s): EFG We measure the effect of unemployment benefit duration on employment. We exploit the variation induced by the decision of Congress in December 2013 not to reauthorize the unprecedented benefit extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to 47 weeks across U.S. states at the beginning of December 2013 were abruptly cut to zero. To achieve identification we use the fact that this policy change was exogenous to cross-sectional differences across U.S. states and we exploit a policy discontinuity at state borders. We find that a 1% drop in benefit duration leads to a statistically significant increase of employment by 0.0161 log points. In levels, 1.8 million additional jobs were created in 2014 due to the benefit cut. Almost 1 million of these jobs were filled by workers from out of the labor force who would not have participated in the labor market had benefit extensions been reauthorized. Oooops, doesnt look like Obama can claim the drop in unemployment, rather the ending of unemployment benefits did. Imagine that. Cutoff their benefits and they go get a job. Wow, what a concept.
Posted on: Tue, 27 Jan 2015 16:15:35 +0000
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