【Job talk】A Quantitative Analysis of Relaxing UI Eligibility Requirements: Evidence from the Pandemic Unemployment Assistance

  • 研討會日期 : 2021-12-28
  • 時間 : 10:00
  • 主講人 : Ms. Yinghsuan Chao (趙映璇)
  • 主持人 : Professor Terry Cheung
  • 地點 : Online or Conference Room B110
  • 演講者簡介 : Ms. Chao will receive her Ph.D. in Economics from Stony Brook University in 2022. Her research fields are Macroeconomics, Public Policy, Applied Microeconomics, Labor, and Applied Econometrics. She is applying for a position of the Institute of Economics, Academia Sinica now.
  • 演講摘要 : Administrative data show that, on average, 22% of unemployment insurance (UI) appli-cations were rejected before the pandemic due to applicants’ failure to meet the eligibility requirements. I found that the uncertainty within the eligibility determination process is criti-cal to explain this high rejection rate of UI. This paper takes into account this uncertainty and uses an equilibrium search model to quantify the effects of relaxing UI eligibility requirements on heterogeneous workers under two policy regimes: prior to (around 2018) and during the pandemic recession (in 2020). Within both policy regimes, I compare such UI expansion that relaxed the requirement with more common UI extensions, such as increasing amount or du-ration of the benefits. I show that the effect of UI expansion on increasing take-up rate is five times higher than other UI extensions. Moreover, I find that UI expansion has a significant pos-itive distributional effect, especially on low earners who experience high unemployment risk and have less ability to self-insure, but are also most likely to be rejected due to past earning requirements. I then use the model to decompose and compare the effects of a whole suite of programs introduced in the pandemic recession, the CARES Act, which includes standard prolonged duration, increased payments, and, for the first time, an expansion of eligibility. I find that this UI expansion, the Pandemic Unemployment Assistance (PUA), is the most crucial policy adjustment. In addition, beneficiaries of PUA mostly have lower earnings. Lastly, I use the model to find the optimal duration of the CARES Act, given the start date. I find that ending benefits at 52 weeks provides the highest increase in welfare per dollar of spending.