Benjamin Griffy from SUNY Albany will present "The Effect of Unemployment Insurance Eligibility in Equilibrium"

Abstract: In the U.S., workers whose past earnings were below a threshold are generally ineligible for unemployment insurance (UI), creating a discontinuous jump in the value of being unemployed. Using a regression discontinuity design with administrative panel data, we estimate a sizable local effect from UI eligibility on earnings in the next employer, around 10% per quarter. This evidence, however, understates UIs causal effect because of endogenous non-compliance. It also does not distinguish between underlying reasons for higher re-employment earnings, a higher share of production, or more productive matches. These are addressed through a quantitative model. The underlying causal effect is 50% higher than the empirical estimates, and nearly all of the effect comes from workers getting a larger share.