Potential Duration of Unemployment Benefits and the Duration of Joblessness

Authors

Stephen A. Woodbury, Michigan State University and W.E. Upjohn Institute for Employment ResearchFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-4474-2415

Issue Date

Draft, August 1988; Revised, March 1989

Abstract

Federal Supplemental Compensation (FSC) was the program that temporarily extended the duration of Unemployment Insurance (UI) benefits by 8 to 14 weeks during 1982-1984. This paper examines whether and to what degree the extension of benefits under FSC increased the expected length of UI recipients' jobless spells. The estimates are derived from a large Ul-administrative data base that spans the expiration of FSC and allows one to observe whether and (approximately) when a worker actually returned to work. Previous studies of the effects of extended benefits have had to make assumptions about UI recipients' return to work that appear to yield downward-biased estimates of the effect of extended benefits on expected jobless duration. The estimates presented here suggest that an additional week of benefit eligibility increases a UI recipient's expected spell of joblessness by nearly one week. Moreover, the estimates suggest that claimants who exhausted their regular UI benefits and were ineligible for an additional 12 weeks of FSC were more than six times as likely to return to work as claimants who exhausted their regular benefits but were eligible for FSC. Hence, the findings offer striking evidence that workers tend to find jobs just as their UI benefits expire.

Subject Areas

UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS; Unemployment insurance; Benefits and duration