Academic Literature

US – Unemployed job losers have low rates of transition out of the labor force until their duration of unemployment ends FRB finds

Economists often expect unemployment insurance (UI) benefits to elevate unemployment rates because recipients may choose to remain unemployed—instead of accepting jobs or dropping out of the labor force—in order to continue receiving benefits. Researchers have attempted to quantify the effect of UI benefit availability on the unemployed ranks and on the U.S. unemployment rate. The federal extensions of available weeks of UI in the recent recession and recovery to date—Emergency Unemployment Compensation 2008 (EUC08) and the Extended Benefits (EB) program—have augmented interest in this issue, and have provided fresh data with which to investigate these questions.

This paper uses individual data from the Current Population Survey between 2005 and 2013 to investigate the influence of program changes in the UI system on the monthly transition rates of unemployed individuals from unemployment to out of the labor force and from unemployment to employment, as compared with staying unemployed. The main findings are as follows:

  • Unemployed job losers have low rates of transition out of the labor force until their duration of unemployment approaches the maximum available months of UI benefits in their state at that time.
  • Further, the transitions from unemployment to out of the labor force are greater in the month after UI benefits are exhausted and thereafter than in the month of exhaustion or the month before exhaustion.
  • There is no discernible relationship between emergency and extended (E/E) UI availability and transitions from unemployment to employment.

These patterns are consistent with the view that during the Great Recession and recovery to date, many job losers continued to look for work, did not succeed in finding jobs, and kept their status as “unemployed” until their benefits were exhausted, after which they gradually dropped out of the labor force.

These findings imply that the longer periods of benefit eligibility under the federal programs EUC08 and EB—up to 99 weeks in many states in 2011 and 2012—contributed to the elevated jobless rates observed during that period, but not via lower employment. By the same token, the sharp contraction of benefit weeks that occurred in 2012 and continued more gradually in 2013 likely contributed to declines in unemployment and participation rates beyond what one would expect based on the improving economy alone. Similarly, the December 28, 2013 sudden cutoff of federal UI payments to an estimated 1.3 million jobless Americans who had been looking for work for more than six months is adding to the pace of transitions from unemployment to dropping out of the labor force, thus reducing the unemployment rate and the labor force participation rate further in the first half of 2014, although very modestly.

Capture d’écran 2015-01-13 à 09.03.43

Capture d’écran 2015-01-13 à 09.04.17

via Labor Market Transitions and the Availability of Unemployment Insurance – Boston Fed.

Related Posts

US – Unemployment Insurance Extension Prevented 1.4 Million Foreclosures

Extending unemployment insurance during the recession didn’t just give the unemployed some extra income, but actually prevented millions from being foreclosed on, according to a new study from Joanne W. Hsu, David A. Matsa, and Brian T. Melzer. Given that different states have different amounts they’ll pay out in unemployment benefits — in 2011 it … Continue reading 

Unemployment insurance reduces transitions into self-rated ill-health in 23 European countries study finds

The global financial crisis of 2008 is likely to have repercussions on public health in Europe, not least through escalating mass unemployment, fiscal austerity measures and inadequate social protection systems. The purpose of this study is to analyse the role of unemployment insurance for deteriorating self-rated health in the working age population at the onset … Continue reading 

US / Testimonies of Americans who rely on unemployment insurance (Video)

Americans who rely on unemployment insurance describe exactly what this essential lifeline has meant to them, and what’s at risk if House Republicans refuse to renew it. On Nancy Pelosi‘s Channel, Democratic Leader of the U.S. House of Representatives for the 112th Congress. Related articles Unemployment Insurance in US / Worse than most other developed countries (video) … Continue reading 

Unemployment Insurance in US / Worse than most other developed countries (video)

Long-term unemployment in the U.S. is twice as high as it was before the financial crisis. That\’s according to the Center on Budget and Policy Priorities. Yet Congress did not extend unemployment benefits in the latest budget deal. Less well known is how the U.S. has one of the least generous unemployment insurance systems … Continue reading 

The ‘Optimal’ unemployment insurance

Benefit-extension programmes reduce competition for jobs. Since the programme induces eligible job seekers to search less hard, non-eligible job seekers face lower competition and find jobs more easily Continue reading 


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Jobs – Offres d’emploi – US & Canada (Eng. & Fr.)

The Most Popular Job Search Tools

Even More Objectives Statements to customize

Cover Letters – Tools, Tips and Free Cover Letter Templates for Microsoft Office

Follow Job Market Monitor on

Enter your email address to follow this blog and receive notifications of new posts by email.

Follow Job Market Monitor via Twitter



%d bloggers like this: