{
  "title": "Supply and Demand Effects of Unemployment Insurance Benefit Extensions: Evidence from U.S. Counties",
  "publication": "IMF Working Papers, March 12, 2021",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2021/03/12/supply-and-demand-effects-of-unemployment-insurance-benefit-extensions-evidence-from-u-s-50112",
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  "summary": "I use three decades of county-level data to estimate the effects of federal unemployment benefit extensions on economic activity.",
  "sections": [
    {
      "heading": "Research question and data",
      "content": "- Objective: Estimate effects of federal unemployment benefit extensions on economic activity using county-level data.\n- Data span: \"three decades of county-level data\".\n- Publication: IMF Working Paper No. 2021/070, Pages: 35, Volume: 2021, Issue: 070, DOI: https://doi.org/10.5089/9781513572680.001, ISBN: 9781513572680, ISSN: 1018-5941.\n- Author and date: Klaus-Peter Hellwig, March 12, 2021."
    },
    {
      "heading": "Identification and empirical strategy",
      "content": "- Main identification challenge: reverse causality because benefit extensions are a function of state unemployment rates.\n- Strategy to address endogeneity:\n  - Use only within-state variation in outcomes to identify treatment effects.\n  - Differences-in-differences approach exploiting heterogeneity in county exposure to policy changes.\n- Approach to channel identification:\n  - Estimate models separately for tradable and non-tradable sectors to distinguish demand and supply-side channels.\n- Instrumental-variable use:\n  - Use benefit extensions as an instrument to estimate local fiscal multipliers of unemployment benefit transfers."
    },
    {
      "heading": "Key findings",
      "content": "- Overall impact:\n  - The overall impact of benefit extensions on activity is positive, pointing to strong demand effects.\n- Supply-side effects:\n  - Even in tradable sectors, there are no negative supply-side effects from work disincentives.\n- Fiscal multiplier:\n  - Fiscal multiplier estimate of 1.92, described as similar to estimates in the literature for other types of spending."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subjects: Economic sectors, Employment, Financial crises, Labor, Labor markets, Unemployment, Unemployment rate.\n- Keywords: Automatic stabilizers, benefit duration, benefit extension, benefit transfer, emergency unemployment compensation program, Employment, Fiscal multiplier, Labor markets, state UI fund, State UI scheme, Unemployment, Unemployment rate.\n\nSource: Klaus-Peter Hellwig, \"Supply and Demand Effects of Unemployment Insurance Benefit Extensions: Evidence from U.S. Counties\", IMF Working Papers 2021, 070 (March 12, 2021).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2021/03/12/supply-and-demand-effects-of-unemployment-insurance-benefit-extensions-evidence-from-u-s-50112"
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    "Authors: Klaus-Peter Hellwig",
    "Published: March 12, 2021",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513572680.001",
    "Objective: Estimate effects of federal unemployment benefit extensions on economic activity using county-level data.",
    "Data span: \"three decades of county-level data\".",
    "Publication: IMF Working Paper No. 2021/070, Pages: 35, Volume: 2021, Issue: 070, DOI: https://doi.org/10.5089/9781513572680.001, ISBN: 9781513572680, ISSN: 1018-5941.",
    "Author and date: Klaus-Peter Hellwig, March 12, 2021.",
    "Main identification challenge: reverse causality because benefit extensions are a function of state unemployment rates.",
    "Strategy to address endogeneity:",
    "Approach to channel identification:",
    "Instrumental-variable use:",
    "Overall impact:",
    "Supply-side effects:",
    "Fiscal multiplier:",
    "Subjects: Economic sectors, Employment, Financial crises, Labor, Labor markets, Unemployment, Unemployment rate.",
    "Keywords: Automatic stabilizers, benefit duration, benefit extension, benefit transfer, emergency unemployment compensation program, Employment, Fiscal multiplier, Labor markets, state UI fund, State UI scheme, Unemployment, Unemployment rate.",
    "**Working Paper**"
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