Assessing the Stabilizing Effects of Unemployment Benefit Extensions

Gorn, Alexey ORCID: 0000-0001-6297-2428 and Trigari, Antonella (2024) Assessing the Stabilizing Effects of Unemployment Benefit Extensions. American Economic Journal: Macroeconomics, 16 (1). pp. 387-440.

Text
Gorn_Trigari_2023.pdf - Author Accepted Manuscript
Available under License Creative Commons Attribution.
Download (1MB) | Preview

Official URL: http://dx.doi.org/10.1257/mac.20210385

Abstract

<jats:p> We study the stabilizing role of benefit extensions. We develop a tractable quantitative model with heterogeneous agents, search frictions, and nominal rigidities. The model allows for a stabilizing aggregate demand channel and a destabilizing labor market channel. We characterize each channel analytically and find that aggregate demand effects quantitatively prevail in the United States. When feeding in estimated shocks, the model tracks unemployment in the two most recent downturns. We find that extensions lowered unemployment by a maximum of 0.36 pp in the Great Recession, while the joint stabilizing effect of extensions and benefit compensation peaked at 1.12 pp in the pandemic. (JEL E24, E32, E43, E52, J64, J65) </jats:p>

Item Type:	Article
Uncontrolled Keywords:	8 Decent Work and Economic Growth
Divisions:	Faculty of Humanities and Social Sciences > School of Management
Depositing User:	Symplectic Admin
Date Deposited:	23 Aug 2023 08:23
Last Modified:	15 Mar 2024 17:26
DOI:	10.1257/mac.20210385
Related URLs:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3172270