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  5. The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?

蝌蚪网 Journal:
Macroeconomics

ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)

The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?

  • Marcus Hagedorn
  • Iourii Manovskii
  • Kurt Mitman
蝌蚪网 Journal: Macroeconomics (Forthcoming)

Abstract

We measure the aggregate effect of unemployment benefit duration on employment and the labor force. We exploit the variation induced by Congress鈥� failure in December 2013 to reauthorize the unprecedented benefit extensions introduced during the Great Recession. Federal benefit extensions that ranged from 0 to 47 weeks across U.S. states were abruptly cut to zero. In sharp contrast to their typical dynamics, labor force and employment growth accelerated sharply in states with larger cuts in benefit duration. These findings are consistent with the equilibrium search framework that assigns an important role to endogenous job creation.

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