Working Paper: NBER ID: w28218
Authors: Chloe N. East; David Simon
Abstract: An extensive literature documents large and persistent declines in earnings following job loss. We study how the public safety net mitigates this using the 1996-2013 Survey of Income and Program Participation. Using an individual fixed effects model, we document which public programs provide the most insurance, and how this varies by pre-job loss characteristics. We find that Unemployment Insurance provides the largest buffer against lost income, but that the neediest are less well insured compared to middle- and higher- income job losers. This has important implications for the progressivity of the safety net, and how best to support displaced workers.
Keywords: public safety net; unemployment insurance; job loss; income replacement; means-tested programs
JEL Codes: H0; H31; J18; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| job loss (J63) | safety net program receipt (H53) |
| job loss (J63) | unemployment insurance (UI) effectiveness (J65) |
| unemployment insurance (UI) effectiveness (J65) | income loss (J17) |
| job loss (J63) | participation in means-tested safety net programs (I38) |
| income levels (J31) | unemployment insurance (UI) access (J65) |
| safety net program effectiveness (I38) | income replacement (H55) |