Labor Market Responses to Unemployment Insurance: The Role of Heterogeneity

Birinci, Serdar; See, Kurt

doi:10.20955/wp.2019.022

Cited by 8 publications

(17 citation statements)

References 45 publications

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“… See Mateos-Planas and Seccia [2006],Mateos-Planas and Ríos-Rull [2010], andMateos-Planas [2013] on models of credit lines;Chatterjee, Corbae, and Rios-Rull [2008a],Chatterjee, Corbae, and Rıos-Rull [2008b], and Chen [2012] on models of credit scoring; andMitman [2011] andHedlund [2011] for models of long term relationships between borrowers and lenders.2 Our paper also complements studies on optimal UI over the business cycle( Mitman and Rabinovich [2011],Birinci and See [2017], and references therein).…”

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confidence: 76%

Can the Unemployed Borrow? Implications for Public Insurance

Braxton¹,

Herkenhoff²,

Phillips³

2020

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We show that unemployed individuals maintain significant access to credit. Following job loss, the unconstrained borrow, while the constrained default and delever. Both defaulters and borrowers are using credit to smooth consumption. We quantitatively show that creditregistries and long-term credit relationships allow the unemployed to partially offset income losses using credit, despite various forms of adverse selection. We estimate the model and find that the optimal provision of public insurance is unambiguously lower as credit access expands. The median individual in our simulated economy would gain both in steady-state as well as during the transition if the income replacement rate from public insurance programs is lowered from the current US policy of 41.2% to 39.8%.

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confidence: 76%

Can the Unemployed Borrow? Implications for Public Insurance

Braxton¹,

Herkenhoff²,

Phillips³

2020

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“…The first group of papers studies the optimal design of transfers using models with an endogenous family labor supply but without aggregate fluctuations (Ortigueira and Siassi 2013, Fernandez-Blanco 2017, Mankart and Oikonomou 2017, Choi and Valladares-Esteban 2019, Haan and Prowse 2019. The second group studies the optimal design of taxes or transfers in a model with aggregate fluctuations but without an endogenous family labor supply as a private insurance mechanism (Mitman and Rabinovich 2015, Bhandari et al 2018, Landais, Michaillat, and Saez 2018, McKay and Reis 2019, Birinci and See 2020. This paper combines these two groups of studies as it analyzes the optimal level and cyclicality of means-tested and employment-tested transfers using a model with an endogeneous family labor supply and aggregate fluctuations.…”

Section: Introductionmentioning

confidence: 99%

Spousal Labor Supply Response to Job Displacement and Implications for Optimal Transfers

Birinci

2019

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I document a small spousal earnings response to the job displacement of the family head. The response is even smaller in recessions, when earnings losses are larger and additional insurance is most valuable. I investigate whether the small response is an outcome of the crowding-out effects of government transfers. To accomplish this, I use an incomplete markets model with family labor supply and aggregate fluctuations where predicted spousal labor supply elasticities with respect to transfers are in line with microeconomic estimates both in aggregate and across subpopulations. Counterfactual experiments indeed reveal that generous transfers in recessions discourage the spousal labor supply significantly. I then show that the optimal policy features procyclical means-tested and countercyclical employment-tested transfers, unlike the existing policy that maintains generous transfers of both types in recessions. Abstracting from the incentive costs of transfers on the spousal labor supply changes both the level and cyclicality of optimal transfers.

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“…Our measure for the combined eligibility and take-up rate of UI is lower than the recipiency rates estimated inBirinci and See (2022) using 1996-2016. But Birinci and See (2022) also note that eligibility and take-up shares are lower for low-income groups, such as the kind of workers that comprise our HB sample.…”

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confidence: 60%

Disincentive Effects of Unemployment Insurance Benefits

Hornstein,

Karabarbounis,

Kurmann

et al. 2023

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Unemployment insurance (UI) acts both as a disincentive for labor supply and as a demand stimulus which may explain why empirical studies often find limited effects of UI on employment. This paper provides independent estimates of the disincentive effects arising from the largest expansion of UI in U.S. history, the pandemic unemployment benefits. Using high-frequency data on small restaurants and retailers from Homebase, we control for local demand effects by comparing neighboring businesses that largely share the positive impact of UI stimulus. We find that employment in low-wage businesses recovered more slowly than employment in high-wage businesses in labor markets with larger differences in the relative generosity of pandemic UI benefits. According to a labor search model that replicates the estimated employment differences between low-and high-wage businesses, the disincentive effects from the pandemic UI programs held back the aggregate employment recovery by 4.7 percentage points between April and December 2020.

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Labor Market Responses to Unemployment Insurance: The Role of Heterogeneity

Cited by 8 publications

References 45 publications

Can the Unemployed Borrow? Implications for Public Insurance

Can the Unemployed Borrow? Implications for Public Insurance

Spousal Labor Supply Response to Job Displacement and Implications for Optimal Transfers

Disincentive Effects of Unemployment Insurance Benefits

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