Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut

By Andrew C. Johnston, Alexandre Mas. Journal of Political Economy, 2016

136 citations recorded by the source corpus.

We examine how a 16-week cut in potential unemployment insurance (UI) duration in Missouri affected search behavior of UI recipients and the aggregate labor market. Using a regression discontinuity design (RDD), we estimate marginal effects of maximum duration on UI and nonemployment spells of 0.45 and 0.25, respectively. We simulate the unemployment rate implied by the RDD estimates assuming no market-level externalities. The implied response closely approximates the decline in the unemployment rate following the benefit cut, suggesting that, even in a period of high unemployment, the labor market absorbed the influx of workers without crowding out other job seekers.

Subfields: Economics and Econometrics, Gender Studies, General Health Professions

View Paper: https://www.semanticscholar.org/paper/1bc15dfcec7737852c4437e49aa7eada8e3c412e

Citations in the corpus

• Social Experiments in the Labor Market (2016, unknown): “Estimates using administrative employment data based on the universe of private employees show little sign of spillover effects (Johnston and Mas 2015).”
• A Macroeconomic Approach to Optimal Unemployment Insurance: Theory (2018, unknown): “Finally, the elasticity wedge ( 1 − ε M / ε m ) is new to our formula, but a growing number of papers estimate it ( for example, Lalive, Landais, and Zweimüller 2015; Marinescu 2016; and Johnston and Mas 2016 .”