NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Importance of Unemployment Insurance as an Automatic Stabilizer

Marco Di Maggio, Amir Kermani

NBER Working Paper No. 22625
Issued in September 2016
NBER Program(s):EFG, LS, PE

We assess the extent to which unemployment insurance (UI) serves as an automatic stabilizer to mitigate the economy's sensitivity to shocks. Using a local labor market design based on heterogeneity in local benefit generosity, we estimate that a one standard deviation increase in generosity attenuates the effect of adverse shocks on employment growth by 7% and on earnings growth by 6%. Consistent with a local demand channel, we find that consumption is less responsive to local labor demand shocks in counties with more generous benefits. Our analysis finds that the local fiscal multiplier of unemployment insurance expenditure is approximately 1.9.

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/w22625

Users who downloaded this paper also downloaded* these:
Hanson and Slaughter w22623 High-Skilled Immigration and the Rise of STEM Occupations in U.S. Employment
Barnes, Mukherji, Mullen, and Sood w22620 Financial Risk Protection from Social Health Insurance
Marinescu and Rathelot w22672 Mismatch Unemployment and the Geography of Job Search
Schmieder and von Wachter w22564 The Effects of Unemployment Insurance Benefits: New Evidence and Interpretation
Marinescu w22447 The General Equilibrium Impacts of Unemployment Insurance: Evidence from a Large Online Job Board
 
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