The Impact of the Federal Pandemic Unemployment Compensation on Job Search and Vacancy Creation
Publikation: Bidrag til tidsskrift › Kommentar/debat › Forskning › fagfællebedømt
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The Impact of the Federal Pandemic Unemployment Compensation on Job Search and Vacancy Creation. / Skandalis, Daphné Jocelyne; Marinescu, Ioana; Zhao, Daniel.
I: Journal of Public Economics, Bind 200, 104471, 08.2021.Publikation: Bidrag til tidsskrift › Kommentar/debat › Forskning › fagfællebedømt
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TY - JOUR
T1 - The Impact of the Federal Pandemic Unemployment Compensation on Job Search and Vacancy Creation
AU - Skandalis, Daphné Jocelyne
AU - Marinescu, Ioana
AU - Zhao, Daniel
PY - 2021/8
Y1 - 2021/8
N2 - During the COVID-19 pandemic, the Federal Pandemic Unemployment Compensation (FPUC) increased US unemployment benefits by $600 a week. Theory predicts that FPUC should decrease job applications, while the effect on vacancy creation is ambiguous. We estimate the effect of FPUC on job applications and vacancy creation week by week, from March to July 2020, using granular data from the online jobs platform Glassdoor. We exploit variation in the proportional increase in benefits across local labor markets. To isolate the effect of FPUC, we flexibly allow for different trends in local labor markets differentially exposed to the COVID-19 crisis. We verify that trends in outcomes prior to the FPUC do not correlate with future increases in benefits, which supports our identification assumption. First, we find that a 10% increase in unemployment benefits caused a 3.6% decline in applications, but did not decrease vacancy creation; hence, FPUC increased labor market tightness (vacancies/applications). Second, we document that tightness was unusually depressed during the FPUC period. Altogether, our results imply that the positive effect of FPUC on tightness was likely welfare improving: FPUC decreased competition among applicants at a time when jobs were unusually scarce. Our results also help explain prior findings that FPUC did not decrease employment.
AB - During the COVID-19 pandemic, the Federal Pandemic Unemployment Compensation (FPUC) increased US unemployment benefits by $600 a week. Theory predicts that FPUC should decrease job applications, while the effect on vacancy creation is ambiguous. We estimate the effect of FPUC on job applications and vacancy creation week by week, from March to July 2020, using granular data from the online jobs platform Glassdoor. We exploit variation in the proportional increase in benefits across local labor markets. To isolate the effect of FPUC, we flexibly allow for different trends in local labor markets differentially exposed to the COVID-19 crisis. We verify that trends in outcomes prior to the FPUC do not correlate with future increases in benefits, which supports our identification assumption. First, we find that a 10% increase in unemployment benefits caused a 3.6% decline in applications, but did not decrease vacancy creation; hence, FPUC increased labor market tightness (vacancies/applications). Second, we document that tightness was unusually depressed during the FPUC period. Altogether, our results imply that the positive effect of FPUC on tightness was likely welfare improving: FPUC decreased competition among applicants at a time when jobs were unusually scarce. Our results also help explain prior findings that FPUC did not decrease employment.
KW - Faculty of Social Sciences
KW - unemployment insurance
KW - job vacancies
KW - job applications
KW - CoVID-19
U2 - 10.3386/w28567
DO - 10.3386/w28567
M3 - Comment/debate
VL - 200
JO - Journal of Public Economics
JF - Journal of Public Economics
SN - 0047-2727
M1 - 104471
ER -
ID: 292090834