An Econometric Analysis of Unemployment Insurance Benefits Adequacy

Authors

Christopher J. O'Leary, W.E. Upjohn Institute for Employment ResearchFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-3372-7527

Series

Upjohn Institute Working Paper No. 90-05

DOI

10.17848/wp90-05

Abstract

Traditionally studies of unemployment insurance benefit adequacy have relied on an expenditure survey. This is expensive, yields small samples, and presumes that the analyst knows which categories of expenditure are necessary. This paper uses an existing large data set, and an agnostic approach. Labor supply are equations are estimated on PSID data using an estimator which accounts for rationing in the labor market. The results are used to compute labor market constraint compensation for comparison to payments under UI systems of representative states. The results suggest that payments which meet the accepted standard of adequacy would usually slightly overcompensate individuals.

Subject Areas

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