Scraping by: Income and Program Participation after the Loss of Extended Unemployment Benefits

53 Pages Posted: 15 Mar 2014

See all articles by Jesse Rothstein

Jesse Rothstein

University of California, Berkeley, The Richard & Rhoda Goldman School of Public Policy; University of California, Berkeley, College of Letters & Science, Department of Economics; National Bureau of Economic Research (NBER)

Robert G. Valletta

Federal Reserve Bank of San Francisco; IZA Institute of Labor Economics

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Abstract

Despite unprecedented extensions of available unemployment insurance (UI) benefits during the "Great Recession" of 2007-09 and its aftermath, large numbers of recipients exhausted their maximum available UI benefits prior to finding new jobs. Using SIPP panel data and an event-study regression framework, we examine the household income patterns of individuals whose jobless spells outlast their UI benefits, comparing the periods following the 2001 and 2007-09 recessions. Job loss reduces household income roughly by half on average, and for UI recipients benefits replace just under half of this loss. Accordingly, when benefits end the household loses UI income equal to roughly one-quarter of total pre-separation household income (and about one-third of pre-exhaustion household income). Only a small portion of this loss is offset by increased income from food stamps and other safety net programs. The share of families with income below the poverty line nearly doubles. These patterns were generally similar following the 2001 and 2007-09 recessions and do not vary dramatically by household age or income prior to job loss.

Keywords: unemployment benefit exhaustion, household income, social program interactions

JEL Classification: J65, I38

Suggested Citation

Rothstein, Jesse and Valletta, Robert G., Scraping by: Income and Program Participation after the Loss of Extended Unemployment Benefits. IZA Discussion Paper No. 8022, Available at SSRN: https://ssrn.com/abstract=2409544 or http://dx.doi.org/10.2139/ssrn.2409544

Jesse Rothstein (Contact Author)

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Robert G. Valletta

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IZA Institute of Labor Economics

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