Workers Face Steeper Challenges After the Loss of Unemployment Benefits

coverIRLE faculty affiliate Jesse Rothstein has co-authored a new IRLE Working Paper, with Robert G. Valletta of the San Francisco Federal Reserve Bank, examining long-term unemployed workers who have exhausted their Unemployment Insurance (UI) benefits.

In 2011 Rothstein published a paper that assessed how Unemployment Benefits (UI) have offered a significant incentive for people to continue looking for work. His research indicated that UI benefits, which have been extended to unprecedented duration since the Great Recession, have had only small negative effects on the likelihood that job seekers take jobs.

Although UI benefits were extended substantially during the Great Recession, job-finding rates were sharply reduced, and many individuals exhausted even their extended benefits before finding work. Rothstein and Valletta's new paper delivers sobering news on the challenges these long-term unemployed workers face. The co-authors found that when job seekers exhaust their UI benefits, households lose UI income equal to roughly one-quarter of total pre-job-loss household income (and about one-third of pre-UI exhaustion income). Only a small portion of this loss is offset by increased income from food stamps and other social safety net programs. Through the process of job loss, UI receipt, and eventual exhaustion, family poverty rates nearly double.

Prof. Rothstein's previous research and this new IRLE Working Paper have been cited by The New York Times and the influential FiveThirtyEight.com Blog.

Read the IRLE Working Papers:
Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits PDF
IRLE Working Paper No.101-14 | February 2014

Unemployment Insurance and Job Search in the Great Recession PDF
IRLE Working Paper No. 115-12 | October 2011

Read the Press Articles:
Losing Benefits Isn't Prodding Unemployed Back to Work
FiveThirtyEight.com | April 14, 2014

Out of Work, Out of Benefits, and Running Out of Options
New York Times | April 3, 2014