This study investigates the sensitivity of the responses of the real price of oil and the U.S. unemployment rate to several real economic activity (REA) measures proposed in the literature. It then ...estimates the responses of the above macroeconomic variables to a set of alternative exogenous oil supply shock series driven by different modelling strategies. While the results are qualitatively robust across the REA measures, they are sensitive to the exogenous oil supply shock series selected.
Using the methodology developed in Alvarez et al. (2014), we decompose the variance of unemployment duration in Spain into three main components: labour market frictions, duration dependence and ...heterogeneity. Crucial to our analysis are the comparisons by different demographic groups over the business cycle to shed light in the mechanisms behind duration dependence. We offer a general approach for interpreting administrative data that is closer to unemployment than non-employment and includes different types of unemployment spells, particularly short spells without the right to claim benefits. Labour market frictions account for the bulk of the variance of unemployment duration, and become more prominent during recessions. Duration dependence constitutes 25% of the total variance, followed by heterogeneity, which represents 18%. Women and college graduates have larger shares of duration dependence. Finally, the share of duration dependence does not vary over the business cycle for non-college workers. But it is higher during expansions for college workers, which is consistent with a statistical discrimination mechanism due to dynamic sample selection.
I analyze quantitatively a model of labor search with unemployment insurance (UI), savings, voluntary quits and various labor attachment requirements. In particular, I study welfare consequences of a ...powerful reform giving UI entitlement to workers quitting their jobs voluntarily in order to search for another one. Results of the model calibrated to the US labor market show that there may be significant welfare gains associated with pursuing a generous entitlement policy for quitters as compared to the US status-quo. Moreover, I employ the assumption of monetary search costs and show that it can explain the empirically documented unemployed worker search behavior. Finally, by inducing different unemployment benefit eligibility requirements, the model identifies a concrete policy that could help us understand differences in the unemployment rate, match quality and income inequality between the US and Europe.
•I study the unemployment insurance reform giving entitlement to quitters.•I find that it may be associated with a significant increase in long-run welfare.•The policy leads to an improvement in match quality and reduction in inequality at the same time.•I investigate the assumption of monetary job search costs.•I find that it can explain the documented unemployed worker search behavior.
We find that on average, an announcement of rising unemployment is good news for stocks during economic expansions and bad news during economic contractions. Unemployment news bundles three types of ...primitive information relevant for valuing stocks: information about future interest rates, the equity risk premium, and corporate earnings and dividends. The nature of the information bundle, and hence the relative importance of the three effects, changes over time depending on the state of the economy. For stocks as a group, information about interest rates dominates during expansions and information about future corporate dividends dominates during contractions.
•Evidence that learning helps explain declining search effort during Great Recession.•Tractable model of search in which beliefs have nonmonotinic effect on search effort.•Structural estimation ...indicating that learning provides strong account of search data.•Evidence from search decisions that job seekers overestimate job-finding prospects.
Krueger and Mueller (2011) document that search effort declined with unemployment duration during the Great Recession. I show that variation in past effort explains this decline. Furthermore, job offers increase subsequent effort. These facts are inconsistent with standard models of search. I introduce a model of sequential search in which workers are uncertain about the offer arrival process and learn through search. Evolving beliefs influence search through two competing channels: the opportunity cost of leisure and the option value of unemployment. Estimation of the model indicates that learning provides a strong account of job search dynamics during the Great Recession.
This paper estimates the permanent and transitory movements in U.S. output and the unemployment rate and the relationships between them. The results suggest that permanent movements in U.S. output ...and the unemployment rate are important for explaining overall fluctuations. Further, the correlation between changes in these series arises in large part due to the relationship between their permanent components.
The Great Recession spurred renewed interest in the moral hazard effects of the Unemployment Insurance (UI) program, however little research has focused on determining its benefits. This paper ...examines the consumption smoothing benefit of the UI program over the last 40years, finding strong evidence of heterogeneity in this effect over time. In particular, the effects of UI are smaller in the 1990s compared with the 1970s. The 1990s were unique because of the long period of low unemployment rates as well as relatively low UI program generosity, thus we test whether the consumption smoothing effects vary by the state unemployment rate and average program generosity. We find suggestive evidence that the effects are larger when the state unemployment rate and average generosity are high. Together, these two dimensions can explain around 30–46% of the differential effect that we find in the 1990s.
•We analyze the food consumption smoothing effect of UI.•The effects are strong in the 1970–80s, but they declined in the 1990s.•These effects are strongest during recessions and when UI generosity is largest.•Changes in economic conditions and UI generosity explain 30–46% of the decline in the 1990s.
This paper studies the effects of unemployment benefit schemes on individual productivity. We created employment and unemployment in the field and compared workers’ productivity under no unemployment ...benefits to productivity under two different unemployment schemes. In one scheme, the unemployed received an unconditional monetary transfer. In the other, the monetary transfer was obtained conditional on the unemployed spending some time on an ancillary activity. Our results challenge the standard economic theory prediction that unemployment benefits, especially unconditional compensations, hinder workers’ effort. We find that workers employed under the unconditional scheme are more productive than workers under the conditional one, and both schemes make workers more productive than having no unemployment benefit. We discuss two possible explanations for our results based on reciprocity and differential psychological costs of unemployment across unemployment benefit schemes.
Data, as supplemental material, are available at
http://dx.doi.org/10.1287/mnsc.2016.2511
.
This paper was accepted by John List, behavioral economics
.
COVID‐19 and the US Safety Net Moffitt, Robert A.; Ziliak, James P.
Fiscal studies,
September 2020, 2020-Sep, 2020-09-00, 20200901, Volume:
41, Issue:
3
Journal Article
Peer reviewed
Open access
We examine trends in employment, earnings and incomes over the last two decades in the United States, and how the safety net has responded to changing fortunes, including the shutdown of the economy ...in response to the COVID‐19 pandemic. The US safety net is a patchwork of different programmes providing in‐kind as well as cash benefits, and it had many holes prior to the pandemic. In addition, few of the programmes are designed explicitly as automatic stabilisers. We show that the safety net response to employment losses in the COVID‐19 pandemic largely consists only of increased support from unemployment insurance and food assistance programmes, an inadequate response compared with the magnitude of the downturn. We discuss options to reform social assistance in the United States to provide more robust income floors in times of economic downturns.
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