Working Paper: CEPR ID: DP14158
Authors: Kurt Mitman; Fatih Karahan; Brendan Moore
Abstract: We develop a method to jointly measure the response of worker search effort (micro effect) and vacancy creation (macro effect) to changes in the duration of unemployment insurance (UI) benefits. To implement this approach, we exploit an unexpected cut in UI durations in Missouri and provide quasi-experimental evidence on the effect of UI on the labor market. The data indicate that the cut in Missouri significantly increased job finding rates by both raising the search effort of unemployed workers and the availability of jobs. The latter accounts for at least one half of the total effect.
Keywords: unemployment insurance; unemployment; vacancies; search
JEL Codes: E24; J63; J64; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cut in unemployment insurance (UI) duration in Missouri (J65) | Increased job finding rates (J68) |
| Cut in unemployment insurance (UI) duration in Missouri (J65) | Increased search effort of unemployed workers (J64) |
| Cut in unemployment insurance (UI) duration in Missouri (J65) | Increased availability of jobs (J68) |
| Cut in unemployment insurance (UI) duration in Missouri (J65) | Increased vacancy-unemployment ratio (J69) |
| Increased search effort of unemployed workers (J64) | Increased job finding rates (J68) |
| Increased availability of jobs (J68) | Increased job finding rates (J68) |
| Cut in unemployment insurance (UI) duration in Missouri (J65) | Increased market tightness (R31) |
| Increased labor demand (due to UI cut) (J23) | Increased job finding rates (J68) |