Early Withdrawal of Pandemic Unemployment Insurance: Effects on Employment and Earnings
- (pp. 85-90)
Abstract
We examine the effects of the sudden withdrawal of expanded pandemic unemployment benefits in June 2021 using anonymized bank transaction data for 16,253 individuals receiving unemployment insurance (UI) in April 2021. Comparing the difference-in-differences between states withdrawing and retaining expanded UI, we find that UI receipt falls 36.3 p.p., while employment rises by only 6.8 p.p. by early September. Average cumulative UI benefits fall by $2,529, while average cumulative earnings increase by only $292. Heterogeneity by unemployment duration implies that these effects are primarily driven by extensive margin expiration of benefits rather than by intensive margin reductions in the benefit level.Citation
Coombs, Kyle, Arindrajit Dube, Calvin Jahnke, Raymond Kluender, Suresh Naidu, and Michael Stepner. 2022. "Early Withdrawal of Pandemic Unemployment Insurance: Effects on Employment and Earnings." AEA Papers and Proceedings, 112: 85-90. DOI: 10.1257/pandp.20221009Additional Materials
JEL Classification
- H75 State and Local Government: Health; Education; Welfare; Public Pensions
- I12 Health Behavior
- J22 Time Allocation and Labor Supply
- J31 Wage Level and Structure; Wage Differentials
- J64 Unemployment: Models, Duration, Incidence, and Job Search
- J65 Unemployment Insurance; Severance Pay; Plant Closings