Measuring the Incidence and Effects of Unemployment ...
Transcript of Measuring the Incidence and Effects of Unemployment ...
Measuring the Incidence and Effects of Unemployment Insurance Benefits During the COVID-19 Crisis Evidence from Administrative Records from California Alex Bell, CPL UCLA Geoff Schnorr, CPL UCLA & UC DAVIS Till von Wachter, CPL UCLA, CEPR, NBER
KeynotePresentationLED/LEHDConferenceApril30,2021
Unemployment During the COVID-19 Crisis in the U.S. & California
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PublichealthmeasuresinresponsetoCOVID-19ledtostaggeringnumberofUIclaims• Over50millionworkersfiledforUIbenefitsinU.S.,about10millioninCalifornia
CrisisalsoledtolargeshiftinthecompositionofUIclaimantstowardslow-wageworkers• Asubstantialincreaseinclaimsfromloweducated,younger,non-white,andwomen
FastmovingnatureofcrisisputmoreemphasisonweeklyUIclaimsdata• Somelimitationsofthatkeysourceofinformationbecameapparent
Inresponse,federalgovernmentsubstantiallyincreasesUIbenefitpayments• Ledtoadebateonwhetherextendingsuchgenerousbenefitsiscounterproductive
è ImportanttorevisitwhatwecanlearnfromUIclaimsandwhatweknowabouttheeffectofUIclaimsonlaborsupply
Unemployment Insurance Extensions during COVID-19 Crisis in U.S.
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NewMajorPolicyResponses:
• LargeincreaseinbenefitlevelsthroughFederalPandemicUnemploymentCompensation(FPUC,$600/week),LostWagesAssistance(LWA,$300/week)
• Thisledtoriseinincomereplacementratetoover100%formanyworkers• PartlyoutofconcernforworkdisincentivesprogramexpiredendofJuly• Commondebateinrecessions:doUIextensionsdomoreharmthangood?
• ExtendedUIcoverageforself-employedandnotcoveredlowincomeworkersthroughPandemicUnemploymentAssistance(PUA)program
MoreCommonMajorPolicyResponses:• Extendbenefitdurationfinancedbyfederalgovernment• FullyfinanceWorkSharing(Short-TimeCompensation)benefits• Providefundsforstates’administrationofUIbenefits
UI Claims during COVID-19 Crisis & Labor Supply Effects
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Step1:AnalyzedifferencesinUIclaimsduringCOVID-19inCalifornia
• ExploitunusualaccesstomicrorecordsfromCaliforniaUIsystem
• Allowustoanalyzereal-timedifferencesbyeducation,demographics,industry
• Allowustomeasure(forthefirsttime!)forwhichdatesindividualsreceivedUI
Step2:EstimateeffectofUIbenefitlevelsonlaborsupplyusingkinkedbenefitschedule
• ExploitidiosyncraticfeaturesofUIbenefitsandchangesduringthecrisis
• CompareeffectduringCOVID-19witheffectsinyearsbeforecrisis&GreatRecession
PreliminaryBottomLine:
1. UImicrodatacanprovidesubstantiallymoreinformationthatpublisheddata
2. HigherUIbenefitsprolongedunemployment,butmaynothavereducedemployment
Unique Administrative Data on Unemployment Insurance (UI) Claims
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UIClaimsData:
Informationontimingofinitialclaims&benefitreceipt
Informationondemographics,residence,industry,prioremployer
Sample:
ConsiderallUIclaimsoccurringduring2020-2021
Lateron,bringindatagoingbacktotheyear2000
Whyisthisunique:
1. Canrevisitsomekeymeasurementissues
2. Provideinformationthatwasnotavailablebefore
3. Canassociateclaimbehaviortocircumstancesofindividualandcommunity
BreakingDownInitialClaimsinCalifornia–ChurnintheUISystem
InCA,initialclaimsstillatpeakofGreatRecessionearly2021.AdditionalclaimoccursifaworkerwasonUIandleavesUIforinterveningemployment.MostinitialclaimantsareadditionalclaimantsinCAsinceFall2020.PUAplayedanimportantroleinSpringandSummerof2020.
Source:CaliforniaPolicyLab,MarchUIReport
(Note:U.S.DOL’s“InitialClaims”CombinesNewInitialClaimsandAdditionClaims.)
StockofUIRecipientsvs.NumberofWeeksCertifiedinCalifornia
Source:CaliforniaPolicyLab,MarchUIReport
ThestockofUIrecipientsintheU.S.istypicallymeasuredbythenumberofpeoplewho“certify”forbenefits–i.e.,thosethatconfirmatabi-weeklylevelthattheyarestillunemployed.
Thisisonlyagoodmeasureifa)claimantsroughlycertifywhentheyareunemployed,b)claimantsdonotcertifyretroactivelyformanyweeks.
Forthefirsttime,CPLcalculatedthestockbytheweekofactualunemployment,whichevolvesquitedifferentfromthenumberofcertifications.
(NotethatinCA,certificationisbi-weekly,sotheno.ofpeoplecertifyingisroughlyhalfofno.ofcertificationsinabsenceofretroactiveclaims.)
More UI Claims Among More Vulnerable Workers
Over1in2workerswithahighschooldegree,youngworkers,Blackworkers;over1in2womenhavefiledaUIclaimfromMarch2020toApril2021.StatewidethefractionofworkersfilingaregularUIclaimwas30%,48.2%includingPUA.
Incontrast,thefractionamongmatureworkersorthosewithaBachelor’sdegreearesmaller.TheriseinclaimsbymorevulnerableworkersispartlyexplainedbyalargeinitialamountofclaimsfromAccommodation&FoodServicesandRetailTradeindustries.
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ACloserLookAtOurPreferredMeasureDuringtheCOVID-19Crisis
Seelowpre-crisisrecipiencyrates.Byendoftheyear,recipiencyratearound90%.Throughout,therewasa30-40percentagepointdifferenceinrecipiencyratebetweenhighestandlowestcounty.
Source:CaliforniaPolicyLab,FebruaryDataPoint
Taking a Closer Look at the Recovery HowhavedifferentneighborhoodsinLACountyfaredsincethepeakofthecrisis?
Inglewood,Comptonareaslowertorecover.
Futureworkwilldirectlyanalyzegeographicpatternsandcorrelations.
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RecipiencyRateDifferencesbyCountyinCalifornia
Recipiencyratesofcountiesvaryinpredictablefashion.Countiesthatarepoorer,havelessbroadbandaccess,aremoreHispanic,andhavefewerEnglishspeakershavelowerrecipiency.ThesameholdsattheCensusTractlevelaswell.
Source:CaliforniaPolicyLab,FebruaryDataPoint
FPUC Helps UI Claimants Avoid Near-Poverty Level Benefit Levels
TheaverageWeeklyBenefitAmount(WBA)forregularUIbenefitsfluctuatedbetween$300-330duringthecrisis.
LowerWBAimplieslowerpriorearnings,sinceWBAisapproximately50%ofprioraverageweeklyearnings.
WithoutFPUC,$330isbelow30%ofMedianFamilyIncomeinCA,andthuswouldbeconsidered“ExtremelyLowIncome”byHUDstandards.
With$300LWAorPACpayment,totalbenefitsriseabove“VeryLowIncome”level,butstillfarbelow“LowIncome”threshold.
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Estimating the Effect on Labor Supply During COVID-19 Crisis
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ApproachNo.1:Exploitthefactthatbenefitschedulehasakinkinit
• InCalifornia,benefitsare50%ofearningsinabaseperiodupto$450,creatingkink
• Baseearningsarethehighestquarterearningsof5mostrecentcompletedquarters
èEstimateastandard‘RegressionKinkDesign’(RKD)1. Assesswhetherindividualsjustaboveandbelowthebenefitkinkarecomparable2. SeewhethertherateofexitingUIalsoexhibitsakinkwhenbenefits‘kink’
ApproachNo.2:Exploitthat$300/weekLWAbenefitonlypaidifUIbenefits>$100/week
• Compareunemploymentofworkerswithjust$100UIbenefitsvs.thosejustbelow$100
• Hardertouseturnon/offofbenefitsupplementsforallworkersbecauseoftimetrends
Approach 1: Kinked UI Benefit Schedule in California (& other states)
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0
200
400
600
800
1000
1200
WBA
0 20000 40000 60000Highest Quarter Wages
Pre-Pandemic
Pandemic
Clear Labor Supply Responses Around Benefit Kink (2011-2019)
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.58
.6
.62
.64
.66
.68
8-w
eek
Surv
ival
-5000 0 5000Highest Quarter Wages Relative to Kink
Benefitsincreaseby50centsper$1priorearnings Benefitsflatat$450
Clear Labor Supply Responses Around Benefit Kink
16
.58
.6
.62
.64
.66
.68
8-w
eek
Surv
ival
-5000 0 5000Highest Quarter Wages Relative to Kink
Benefitsincreaseby50centsper$1priorearnings Benefitsflatat$450
Sharpdifferenceinslopesàeffectof(lackof)addedbenefits
counterfactualwithnokinkinbenefits
Benefit Effects from 2006 to 2020 Expressed in Percent Terms To Account for Differences in Benefit Levels
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0
.2
.4
.6
.8
1
% D
urat
ion
Incr
ease
from
1%
WBA
Incr
ease
2006 2008 2010 2012 2014 2016 2018 2020year
MedianUSelasticity≈ .38(Till’ssurvey)
1%increaseinbenefitsà≈ .25-.3%durationincrease(doesnotseemtovaryw/recessions)
Approach 2: Discontinuity in Receipt of $300/week LWA Benefit
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For6weeksstartingonJuly26th,individualscouldreceiveadditional$300/weekfromLostWagesAssistance(LWA).ButonlyiftheirWeeklyBenefitAmount(WBA)wasatleast$100.FigureclearlyshowsthatthoseworkersreceivingLWAhadalowerrateofUIweeklyexit.(BasedonaverageexitratesforindividualsreceivingbenefitsendofAugust.)
Approach 2: Discontinuity in Receipt of $300/week LWA Benefit
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SizeofLaborSupplyEffect:
• At$100WeeklyBenefitsAmount,benefitsincreaseby300%!
• Averageunemploymentdurationincreasedby~20%,orabout5weeks
è Estimateimpliessimilarmagnitudeasregressionkinkdesign!
Interpretation:
1. ClearevidencethatUIbenefitsraisedunemploymentdurationsduringthecrisis
2. Onlyaconcerniftheseworkersgetworsejobs–workinprogress
3. MayhavepreventedinfectionswithCOVID-19–workinprogress
4. NotevidencethatUIbenefitsloweredtotalemployment
Conclusion
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UIDataAllowedustoObtainSomeKeyInsightsIntotheUnemploymentCrisis
• NovelinsightsintoarangeofaspectsofUIsystem
Analyzedincidence&laborsupplyeffectsofUnemploymentInsuranceinCOVID-19Crisis
• UseduniqueadministrativemicrorecordscoveringallCaliforniaforover20years
• UsedRegressionKink&DiscontinuityDesignstoobtaincausaleffectofUIbenefits
OverallourCurrentFindingsIndicate:
1. Individual-levelUIdataallowedtosubstantiallyimprovemeasurementofincidence,adequacy,andrecipiencyofUIduringthecrisis
2. IncreasedUIbenefitsduringthecrisislikelyincreaseddurationofUIbenefitreceipt,thesameorlesscomparedtobeforethecrisis
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BONUSSlides–RKD
Comparison of Magnitudes with Respect to Prior Literature
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Differenceinourpaper:MostU.S.papersuseUIdurationinweeks
Thatsaid,comparedtothetypicalbenefitelasticity,ourestimatesareonthelowerend:
• LiteratureSurvey(Schmieder&vonWachter2018):U.S.medianelasticity0.38
• RKD5U.S.states1976-84(Landais2015):0.21-0.7
• RKDMissouri2003-2013(Cardetal.2015):Expansion0.35,Recession0.65-0.9
• U.S.1985-2000(KroftandNotowidgdo2016):0.6(Recession0.3)
Variationofbenefitelasticitywithunemploymentrate:
• Mixedevidence-Kroft&Notowidigdo(declining)vs.Cardet.al.(increasing)
• Effectofbenefitdurationclosetoa-cyclicalinSchmieder,vonWachter,Bender(2012)
èOurestimatesareofplausiblemagnitude&provideimportantupdatetoliterature
No Discernible Change in Density of UI Beneficiaries Around Kink
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.021
.022
.023
.024
.025
Den
sity
of C
laim
s
6000 8000 10000 12000 14000 16000Highest Quarter Wages
Pre-Pandemic
Pandemic
Labor Supply Effect at Kink has Declined During COVID-19 Crisis
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.58
.6
.62
.64
.66
.68
8-w
eek
Surv
ival
-5000 0 5000Highest Quarter Wages Relative to Kink
Benefitsincreaseby50centsper$1priorearnings
Downwardpivotmaybe:1) Behavioralresponses
to+$6002) Disproportionate
impactofcrisisonlowerearners,etc.
Benefitsflatat$450+$600
Labor Supply Effect at Kink has Declined During COVID-19 Crisis
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.58
.6
.62
.64
.66
.68
8-w
eek
Surv
ival
-5000 0 5000Highest Quarter Wages Relative to Kink
Benefitsincreaseby50centsper$1priorearnings
Downwardpivotmaybe:1) Behavioralresponses
to+$6002) Disproportionate
impactofcrisisonlowerearners,etc.
counterfactualwithnokinkinbenefits
Benefitsflatat$450+$600
Labor Supply Effect at Kink has Declined During COVID-19 Crisis
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.58
.6
.62
.64
.66
.68
8-w
eek
Surv
ival
-5000 0 5000Highest Quarter Wages Relative to Kink
Benefitsincreaseby50centsper$1priorearnings
Downwardpivotmaybe:1) Behavioralresponses
to+$6002) Disproportionate
impactofcrisisonlowerearners,etc.
counterfactualwithnokinkinbenefits
Benefitsflatat$450+$600
Responsetolostbenefitsmuchsmallerthanearlier
Labor Supply Effect at Kink has Declined During COVID-19 Crisis
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.58
.6
.62
.64
.66
.68
8-w
eek
Surv
ival
-5000 0 5000Highest Quarter Wages Relative to Kink
Benefitsincreaseby50centsper$1priorearnings
Downwardpivotmaybe:1) Behavioralresponses
to+$6002) Disproportionate
impactofcrisisonlowerearners,etc.
ResponsetolostbenefitsmuchsmallerthanearlieràButalsocomingfromalargerbase…letuslookatthenumbers
counterfactualwithnokinkinbenefits
Benefitsflatat$450+$600
Robustness with Respect to Changes in Bandwidth
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-.00008
-.00006
-.00004
-.00002
0
.00002
.00004
.00006
.00008
Red
uced
-For
m E
stim
ate
0 2000 4000 6000 8000 10000HQW bandwidth
Role of Recall for Chances of Reemployment [BONUS]
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Differences in Labor Supply Effects at Kink by Recall Status [BONUS]
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-.00001
0
.00001
.00002
.00003
Diff
eren
ce in
RF
Estim
ate
for t
hose
exp
ectin
g re
call
2000 2005 2010 2015 2020year
Interpretation:Generallylowerbehavioralresponseforthoseexpectingrecall(lessnegativeslopearoundkink)
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BONUSSlides–RKD
Robustness with Respect to Changes in Bandwidth
-.1
0
.1
.2
.3
RD
Est
imat
e
0 50 100 150Bandwidth
Variation in Effect by Calendar Week
0
.1
.2
.3
RD
Est
imat
e
Aug 1
Aug 8
Aug 15
Aug 22
Aug 29
Sep 5
Week of Unemployment