The effect of extending the duration of unemployment insurance (UI) benefits on nonemployment duration is a hotly debated question. The vast majority of the literature (e.g., Lawrence Katz and Bruce D. Meyer 1990, Johannes F. Schmieder, Till von Wachter, and Stefan Bender 2012) [henceforth SVB]) analyzes the effect of extensions in UI durations or increases in UI benefits on the initial nonempl...

This paper investigates the feasibility and redistributive consequences of an institutional innovation: the replacement of the traditional unemployment insurance (UI) system by unemployment insurance savings accounts (UISA) – the scheme where each worker is required to save a fraction of earnings in his or her account, and draw unemployment compensation from it. By internalizing the costs of un...

What Do Labor Market Institutions Do? The past couple of decades have seen a huge increase in research on various labor market institutions. This paper offers a brief overview and discussion of research on the labor market impacts of minimum wages (MW), unemployment insurance (UI), and employment protection legislation (EPL). It is argued that research on UI is largely a success story, involvin...

This paper is concerned with evaluating alternative unemployment insurance (UI) schemes in a dynamic economy with moral hazard. We consider changes in the size and duration of UI benefits, and the effects of experience rating, and use a dynamic contracting approach to determine a benchmark optimal allocation. Radical changes in the current UI system increase welfare, but not by much. A move to ...

In this paper we argue that the standard way of measuring the social cost from employment reductions in response to changes in unemployment insurance (UI) benefits using labor supply elasticities and marginal effects provides only a partial measure of the true disincentive effect and ensuing social costs of UI benefits. An important difficulty of the standard measures is that they are difficult...

In the context of a standard equilibrium matching framework, this paper considers how a duration-dependent unemployment insurance (UI) system affects the dynamics of unemployment and wages in an economy subject to stochastic job-destruction shocks. It establishes that re-entitlement effects induced by a finite duration UI program generate intertemporal transfers from firms that hire in future b...

The duration of U.S. Unemployment Insurance (UI) benefits was expanded to an unprecedented degree in the Great Recession, reaching a maximum of 99 weeks in many states by 2010. These expansions were then rolled back in 2012 and 2013. Since January 2014, no state has had UI benefits available beyond the normal duration (26 weeks in most states). Unemployment insurance extensions may raise measur...

Following the Great Recession, most states’ unemployment insurance (UI) trust funds became insolvent, requiring the states to borrow from the U.S. Treasury to finance benefit payments. This article describes the basics of UI financing and reviews the origins of the financial crisis facing the federal-state UI system. It then examines the main components of the UI payroll tax—the taxable wage ba...