Spending and Job-Finding Impacts of Expanded Unemployment Benefits: Evidence from Administrative Micro Data

2024/08/29 by Peter Ganong, Fiona Greig, Pascal Noel +2 · 1 voice · 21 citations
Business, Management and Accounting · Economics, Econometrics and Finance · Social Sciences · #Economic growth #Economics #Financial Literacy, Pension, Retirement Analysis #Job creation #Labor market dynamics and wage inequality #Labour economics #Retirement, Disability, and Employment #Unemployment

paper · doi:10.1257/aer.20220973

published in American Economic Review 114(9), 2898-2939 (American Economic Association)

openalex publication_date 2024/08/29 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/15

Abstract

We show that the largest increase in unemployment benefits in US history had large spending impacts and small job-finding impacts. This finding has three implications. First, increased benefits were important for explaining aggregate spending dynamics—but not employment dynamics—during the pandemic. Second, benefit expansions allow us to study the MPC of normally low-liquidity households in a high-liquidity state. These households still have high MPCs. This suggests a role for permanent behavioral characteristics, rather than just current liquidity, in driving spending behavior. Third, the mechanisms driving our results imply that temporary benefit supplements are a promising countercyclical tool. (JEL E21, E24, E32, E62, E71, G51, J65)

Citations

• The Effects of Extended Unemployment Insurance Over the Business Cycle: Evidence from Regression Discontinuity Estimates Over 20 Years

Cited by

• Employment and Consumption Responses to the Withdrawal of Unemployment Benefits

Discussions

• “The researchers also found that the supplemental UI benefits significantly increased spending. Overall, the findings suggest that temporary benefit supplements are a promising tool for countering eco [bsky, 20 points, 2 comments]

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