The General Equilibrium Impacts of Unemployment Insurance: Evidence from a Large Online Job Board
During the Great Recession, U.S. unemployment benefits were extended by up to 73 weeks. Theory predicts that extensions increase unemployment by discouraging job search, a partial equilibrium effect. Using data from the large job board CareerBuilder.com, I find that a 10% increase in benefit duration decreased state-level job applications by 1%, but had no robust effect on job vacancies. Job seekers thus faced reduced competition for jobs, a general equilibrium effect. Calibration implies that the general equilibrium effect reduces the impact of unemployment insurance on unemployment by 40%: increasing benefit duration by 10% increases unemployment by only 0.6% in equilibrium.
I would like to thank Sanggi Kim and Sarah Sajewski for excellent research assistance. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Marinescu, Ioana, 2017. "The general equilibrium impacts of unemployment insurance: Evidence from a large online job board," Journal of Public Economics, Elsevier, vol. 150(C), pages 14-29. citation courtesy of
The General Equilibrium Impacts of Unemployment Insurance: Evidence from a Large Online Job Board, Ioana Marinescu. in Social Insurance Programs (Trans-Atlantic Public Economics Seminar, TAPES), Gordon, Peichl, and Poterba. 2019