NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Unemployment Benefits and Unemployment in the Great Recession: The Role of Macro Effects

Marcus Hagedorn, Fatih Karahan, Iourii Manovskii, Kurt Mitman

NBER Working Paper No. 19499
Issued in October 2013
NBER Program(s):   EFG

We exploit a policy discontinuity at U.S. state borders to identify the labor market implications of unemployment benefit extensions. In contrast to the existing literature that focused on estimating the effects of benefit duration on job search decisions by the unemployed – the micro effect – we are guided by equilibrium labor market theory and focus on measuring the general equilibrium macro effect that operates through the response of job creation to benefit extensions. We find that it is the latter effect that is very important quantitatively. In particular, benefit extensions raise equilibrium wages and lead to a sharp contraction in vacancy creation, employment, and a rise in unemployment.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

This paper was revised on November 12, 2014

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19499

Users who downloaded this paper also downloaded these:
Figlio, Schapiro, and Soter w19406 Are Tenure Track Professors Better Teachers?
Mueller, Rothstein, and von Wachter w19672 Unemployment Insurance and Disability Insurance in the Great Recession
Rothstein w17534 Unemployment Insurance and Job Search in the Great Recession
Farber and Valletta w19048 Do Extended Unemployment Benefits Lengthen Unemployment Spells? Evidence from Recent Cycles in the U.S. Labor Market
Christiano, Eichenbaum, and Trabandt w19265 Unemployment and Business Cycles
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us