Full Citation
Title: How much did Bonus Unemployment Insurance Payments During the COVID Pandemic Depress Aggregate Employment?
Citation Type: Miscellaneous
Publication Year: 2023
ISBN:
ISSN:
DOI:
NSFID:
PMCID:
PMID:
Abstract: During the COVID-19 pandemic, the number of Unemployment Insurance (UI) benefit recipients rose to unprecedented levels. This spike in benefits was especially dramatic for the number of recipients collecting partial benefits-UI benefits earned while working part time-which doubled from around 8% of total UI recipients pre-pandemic to 16% in early 2021. This rise coincided with some key temporary changes to the UI program, most prominently the Federal Pandemic Unemployment Compensation (FPUC), which paid a fixed $600 bonus to all workers collecting any amount of UI benefits. The FPUC induced a substantial cliff in disposable income for many workers, such that returning to full-time or near-full-time work would result in a loss of hundreds of dollars of weekly income, compared to working part-time just under the threshold required to collect benefits. This paper seeks to understand the effect this program had on aggregate employment and underemployment. To that end, I construct a job search model with moral hazard in which workers have the option to work part-time (even when they have full time job offers) and collect partial UI benefits. I calibrate this model to the pre-pandemic and then study the effects during the pandemic, using it to quantify the extent to which this newly introduced incentive discouraged workers from returning to full-time work.
Url: https://www.rmwinslow.com/research/pdf/jmp.pdf
User Submitted?: No
Authors: Winslow, Robert
Publisher:
Data Collections: IPUMS CPS
Topics: Health, Labor Force and Occupational Structure, Poverty and Welfare
Countries: