University of Toronto and Opportunity Insights Early Withdrawal of Pandemic Unemployment Insurance: Effects on Earnings, Employment and Consumption
Descriptive analysis across California’s 8,000 Census tracts suggest that a variety of channels – including legal work authorization, language, and the technological divide – may play a role in some unemployed workers not being able to access UI benefits during the pandemic. We find that unemployed people in communities of concentrated poverty and with higher shares of racial and ethnic minorities have been less likely to receive regular UI benefits. Additionally, residents of already-disadvantaged neighborhoods were least insured against job loss in the pandemic. Essential measurements during the pandemic include the following results: by mid-March 2020, 8.7 million unique California claimants, or 45% of the California workforce applied for some type of UI benefits, and the number of workers receiving unemployment benefits remained startlingly high for a protracted period with 4.1 million claimants, or 22% of the state’s labor force receiving regular UI or PUA benefits for unemployment in November 2020. This paper includes a detailed geographic analysis of UI claims across California’s nearly 8,000 Census tracts. New measures of weekly UI receipt are also presented along with a breakdown by demographics and industry. It starts by examining initial claims-including Pandemic Unemployment Assistance (PUA) claims for federally funded benefits to those that do not qualify for regular UI benefits because of work in non-covered sectors. This paper presents a deep dive by the California Policy Lab at UCLA into access and use of unemployment insurance (UI) in California during the pandemic. An Analysis of Unemployment Insurance Claims in California During the COVID-19 PandemicĬalifornia Employment Development Department These large responses contrast with a theoretical prediction that spending responses should shrink with liquidity. Notably, spending responses are large even for households who have built up substantial liquidity through prior receipt of expanded benefits. Using quasi-experimental research designs, we estimate a large marginal propensity to consume out of benefits. In sharp contrast to normal times when spending falls after job loss, we show that when expanded benefits are available, spending of the unemployed actually rises after job loss. We find that spending responds more than predicted, while job search responds an order of magnitude less than predicted. history affect household behavior? Using anonymized bank account data covering millions of households, we provide new empirical evidence on the spending and job search responses to benefit changes during the pandemic and compare those responses to the predictions of benchmark structural models. How did the largest expansion of unemployment benefits in U.S.
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