The Impact of Unemployment Insurance Benefit Levels on Recipiency

Abstract

This article studies the effect of unemployment insurance benefit levels on recipiency. Increasing benefit levels (as measured by the fraction of weekly earnings of the lost job that they replace) is found to significantly increase the probability of unemployment insurance recipiency among the eligible. There is some evidence, however, that the effect is smaller at high replacement rates. Cost increases resulting from take-up responses are found to be substantial for increases in the state's maximum benefit amount and for increases in the weekly benefit amount in low-replacement-rate states.

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