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Journal of Political Economy Vol. 133 No. 9 2025

Micro and Macro Effects of Unemployment Insurance Policies: Evidence from Missouri

Fatih Karahan1,2,3; Kurt Mitman1,2,3; Brendan Moore1,2,3

1 Economic Policy Institute · 2 Central Bank of the Republic of Turkey · 3 Stanford University

Abstract

We develop a method to jointly measure the response of worker search effort (micro effect) and vacancy creation (macro effect) to changes in the duration of unemployment insurance (UI) benefits. To implement this approach, we exploit an unexpected cut in UI durations in Missouri and provide quasi-experimental evidence on the effect of UI on the labor market. In our baseline specification, the data indicate that the cut in Missouri increased job-finding rates by 12% by raising firm vacancy creation and the search effort of unemployed workers. Both channels contribute roughly equally to the total effect.

DOI
10.1086/736215
Volume
133
Issue
9
Pages
2836-2873
Language
en
Sources
openalex crossref bibtex:phds-export.bib

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