A Quasi-Experimental Approach to the Effects of Unemployment Insurance
Bruce D. Meyer
This paper uses the natural experiment provided by periodic increases in
state benefit levels to estimate the effects of higher unemployment insurance
benefits, individuals who filed just before and just after sixteen benefit
increases are compared using data from five states during 1979-1984. The
increases, which average about 9 percent, are found to increase the period of
unemployment insurance receipt by about one week. This effect is precisely
estimated and found using several approaches. the incidence of layoffs
resulting in unemployment insurance claims is unaffected by the increases.
The evidence does not suggest that higher benefits lead to better jobs. In
fact, the post-unemployment earnings of individuals receiving higher benefits
are estimated to fall slightly, but the estimates are imprecise.
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