Delayed Collection of Unemployment Insurance in Recessions

Xie, Zoe (2019): Delayed Collection of Unemployment Insurance in Recessions. Published in: European Economic Review , Vol. 118, No. 2019 (7 June 2019): pp. 274-295.

Abstract

Using variations in UI policies over time and across U.S. states, this paper provides evidence that allowing unemployed workers to delay the collection of benefits increases their job-finding rate. In a model with discrete job take-up decisions, benefit entitlement, wage- indexed benefits, and heterogeneous job types, I demonstrate that the policy can increase an unemployed worker’s willingness to work, even though more benefits in general reduce the relative value of employment. In a calibrated quantitative model, I find that allowing delayed benefit collection increases the overall job finding rates and may lower unemployment rate both in a steady state stationary economy and over a transition path during 2008–2012.

• Item Type: MPRA Paper
• Language: English
• Keywords: Unemployment insurance Social program design Great recession
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J65 - Unemployment Insurance ; Severance Pay ; Plant Closings

References

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