Graduate Research and Discovery Symposium (GRADS)

Document Type

Poster

Publication Date

Spring 2015

Abstract

An important part of the policy response to the Great Recession was a substantial extension of the Unemployment Insurance benefit, from 26 weeks to 99 weeks. This paper attempts to quantify the effect of this extension on the job-finding rates of insured unemployed workers. Using administrative data from the Kentucky Office of Employment and Training for the period January 2006 through December 2011, I construct hazards of exit to employment according to the schedule of policy changes. I use hazard models with several specifications to estimate the effect of the benefit extension on reemployment and to distinguish this effect from the effect of macroeconomic factors. My estimates confirm that increasing unemployment benefits decreases job-finding rates and prolongs unemployment durations, consistent with the prediction of the standard job search model. My counterfactual results suggest that the extension of the benefit lowered monthly exit hazards by 5 percent, an estimate which is higher than those from the previous literature that uses the Current Population Survey (CPS) to study the Great Recession.

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