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Unemployment Insurance

posted Jul 3, 2011, 9:08 PM by Kyle Herkenhoff


It would be interesting to look at the hazard out of unemployment by each tier of benefits. The mean duration in unemployment is now close to 32 weeks, which means that many people are holding on until the later stages. This will provide plenty of variation.

Key Question: If the tier structure provides incentives to find jobs earlier, why do states not adopt this structure in normal times? David Card & Raj Chetty & Andrea Weber, 2007 have already definitively shown that there is a big spike when benefits expire, and so perhaps this is the natural experiment the US needs to assess the policies currently have place. Imagine a tier system that reduces state government expenditure on unemployment insurance by 1/3...


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