Spending and Job Search Impacts of Expanded Unemployment Benefits: Evidence from Administrative Micro Data [open pdf - 0B]
From the Abstract: "How did the largest expansion of unemployment benefits in U.S. 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. We find that spending responds more than predicted, while job search responds an order of magnitude less than predicted. 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. Using quasi-experimental research designs, we estimate a large marginal propensity to consume out of benefits. Notably, spending responses are large even for households who have built up substantial liquidity through prior receipt of expanded benefits."
Working Paper No. 2021-19
Becker Friedman Institute for Research in Economics
Becker Friedman Institute for Research in Economics: https://bfi.uchicago.edu/