NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Interpreting Recent Quasi-Experimental Evidence on the Effects of Unemployment Benefit Extensions

Marcus Hagedorn, Iourii Manovskii, Kurt Mitman

NBER Working Paper No. 22280
Issued in May 2016
NBER Program(s):EFG, LS

We critically review recent methodological and empirical contributions aiming to provide a comprehensive assessment of the effects of unemployment benefit extensions on the labor market and attempt to reconcile their apparently disparate findings. We describe two key challenges facing these studies - the endogeneity of benefit durations to labor market conditions and isolating true effects of actual policies from agents' responses to expectations of future policy changes.

Marinescu (2015) employs a methodology that does not attempt to address these challenges. A more innovative approach in Coglianese (2015) and Chodorow-Reich and Karabarbounis (2016) attempts to overcome these challenges by exploiting a sampling error in unemployment rates as an exogenous variation. Unfortunately, we find that this approach falls prey to the very problems it aims to overcome and it appears unlikely that the fundamental bias at the core of this approach can be overcome. We find more promising the approach based on unexpected policy changes as in the recent contributions by Johnston and Mas (2015) and Hagedorn, Manovskii and Mitman (2015). This approach by design addresses the problem of benefit endogeneity. It does not, however, fully address the effects of expectations and generally yields a lower bound on the actual effects of policies.

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

Access to NBER Papers

You are eligible for 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:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22280

Users who downloaded this paper also downloaded* these:
Hagedorn, Manovskii, and Mitman w20884 The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?
Chodorow-Reich and Karabarbounis w22163 The Limited Macroeconomic Effects of Unemployment Benefit Extensions
Hagedorn, Karahan, Manovskii, and Mitman w19499 Unemployment Benefits and Unemployment in the Great Recession: The Role of Macro Effects
Davis, Haltiwanger, Jarmin, and Miranda Volatility and Dispersion in Business Growth Rates: Publicly Traded versus Privately Held Firms
Schmieder and von Wachter w22564 The Effects of Unemployment Insurance Benefits: New Evidence and Interpretation
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

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

Contact Us