Pandemic UI in US – Ending it increased employment by 4.4 pp while reducing UI recipiency by 35 pp

In June 2021, 22 states ended all supplemental pandemic unemployment insurance (UI) benefits, eliminating benefits entirely for over 2 million workers and reducing benefits by $300 per week for over 1 million workers. Using anonymous bank transaction data and a difference-in-differences research design, we measure the effect of withdrawing pandemic UI on the financial and employment trajectories of unemployed workers in states that withdrew benefits, compared to workers with the same unemployment duration in states that retained these benefits.

In our data through August 6, we find that ending pandemic UI increased employment by 4.4 percentage points while reducing UI recipiency by 35 percentage points among workers who were unemployed and receiving UI at the end of April 2021. Through the first week of August, average UI benefits for these workers fell by $278 per week and earnings rose by $14 per week, offsetting only 5% of the loss in income. Spending fell by $145 per week, as the loss of benefits led to a large immediate decline in consumption.

Chosen excerpts by Job Market Monitor. Read the whole story @ Early Withdrawal of Pandemic Unemployment Insurance: Effects on Earnings, Employment and Consumption