Ui Generosity and Job Acceptance: Effects of the 2020 Cares Act

To provide relief to the U.S. labor market following onset of COVID-19 pandemic, CARES Act granted an extra $600 per week in UI benefit payments from late March through July 2020. This unprecedented increase generosity raised concern that recipients would be largely unwilling accept job offers, slowing recovery. Job acceptance decisions weigh value a against remaining unemployed. A reservation level exists this dynamic decision problem at which individual is indifferent between accepting and refusing offer. simple statistic summarizing conditional on perceived state weeks Unemployment Insurance (UI) compensation remaining. Estimating for wide range US workers suggests few turn down offer return work previous wage under expanded payments. Direct empirical analysis force transitions using matched Current Population Survey (CPS) data, linked annual earning records CPS income supplement form replacement rates, shows moderate disincentive effects supplemental finding rates; framework also small $300 weekly available during 2021.