Early Withdrawal of Pandemic Unemployment Insurance: Effects on Earnings, Employment and Consumption
Summary
Research brief by Kyle Coombs, Arindrajit Dube, Calvin Jahnke, Raymond Kluender, Suresh Naidu and Michael Stepner, last updated August 20, 2021, on the 21 states that ended all supplemental pandemic unemployment insurance in June 2021. Using anonymous banking data from Earnin, the authors find the early withdrawal cut off benefits for over 2 million workers and reduced them by $300 per week for over 1 million more. Employment rose 4.4% among April UI recipients in those states: for every 8 workers who lost benefits, 1 found a new job. For each dollar of lost benefits, spending fell by 52 cents and only 7 cents of new income was found. Extrapolated to all recipients, the states gave up $4 billion in federal benefits as of August 6, while spending fell $2 billion and earnings rose $270 million.
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“Early Withdrawal of Pandemic Unemployment Insurance: Effects on Earnings, Employment and Consumption.”
Original at www.aeaweb.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/early-withdrawal-of-pandemic-ui-effects-on-employment-and-earnings/
, SHA-256 5eacb0b2d7934b098de891535bf9cf2a1a2231ce3affd97297fb8e0f4af2aba0.Full text
Early Withdrawal of Pandemic Unemployment Insurance:
Effects on Earnings, Employment and Consumption of Low-Income Workers
by Kyle Coombs, Arindrajit Dube, Calvin Jahnke, Raymond Kluender, Suresh Naidu & Michael Stepner
In June 2021, 21 states ended all supplemental pandemic unemployment insurance benefits. This early withdrawal
eliminated benefits for over 2 million workers and reduced benefits by $300 per week for over 1 million workers.
We use real-time anonymous banking data to measure how this policy change affected the financial security and
employment trajectories of unemployed workers with low incomes.
FOR EVERY 8 WORKERS WHO LOST THEIR BENEFITS, 1 WORKER FOUND A NEW JOB
Di!erence in Percentage of Workers
+10%
+4.4% Employed
0%
-10%
-20% quertyuiopasdf
-30%
-35% Receiving UI
-40%
-50%
Jan Feb Mar Apr May Jun Jul Aug
2021
Compared to states that continued pandemic UI benefits, 35% of workers who received April UI had lost their
benefits entirely due to the early withdrawal. An extra 4.4% of April UI recipients found employment in early
withdrawal states.
FOR EVERY $1 OF REDUCED BENEFITS, SPENDING FELL BY 52 CENTS.
ONLY 7 CENTS OF NEW INCOME WAS FOUND FOR EACH DOLLAR OF LOST BENEFITS.
Di!erence in Dollars Cumulative 8-Week Di!erence
$200 Earnings
+$93
$0
$100
+$14 Earnings
$0
quertyuiopasdf
-$100
-$678
-$145 Spending Spending
-$200
-$278 UI Benefits
-$300
Jan Feb Mar Apr May Jun Jul Aug
-$1385
2021 UI Benefits
Extrapolating to all UI recipients in the early withdrawal states, we estimate these states eliminated $4 billion in
unemployment benefits paid by federal transfers as of August 6. Spending fell by $2 billion and earnings rose by
$270 million. These states therefore saw a much larger drop in federal transfers than gains from job creation.
A technical research brief with further details about this analysis is available online.
ABOUT THE TEAM
The researchers are a team of non-partisan economists using real-time data to provide insights on the effects of economic policy.
They are based at Columbia University, Harvard University, the University of Massachusetts Amherst and the University of Toronto.
The anonymous banking data was provided by Earnin, a financial services company that provides products such as early wage access.
Requests for additional information or technical questions can be directed to uiexpiry@stepner.topicbox.com
Last update: August 20, 2021
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