Macroeconomic Effects of UI Extensionsat Short and Long Durations

Abstract

We study the macroeconomic effects of unemployment insurance (UI) benefit extensions inthe United States at short and long durations. To do this, we develop a new state level dataseton trigger variables for UI extensions and a “UI Benefits Calculator” based on detailed legisla-tive and administrative sources spanning five decades. Our identification approach exploitsvariation across states in the options governing the Extended Benefits program. We find thatUI extensions during time periods when UI benefit durations are already long—such as in theGreat Recession—have minimal effects. However, UI extensions at shorter initial durationshave substantial effects on the unemployment rate and the number of people receiving UI,with larger estimates during Covid. We relate our estimates to microeconomic estimates of theeffects of UI extensions through the lens of partial and general equilibrium models. Joint paper Miguel Acosta, Emi Nakamura, and Jón Steinsson.