From 1985 to 2019, administrative data indicates that 22% of unemployment insurance (UI) applicants were denied benefits annually due to not meeting eligibility requirements. This paper introduces a quantitative equilibrium search model that reflects realistic UI application processes for heterogeneous workers and study their UI application decisions and employment outcomes.
The model is then employed to evaluate the effects of relaxing eligibility requirements versus increasing benefit levels and duration. The analysis demonstrates that, given the same amount of expenditure, relaxing earning requirements has the strongest impact on increasing take-up rates and average welfare. [Click here for more]
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