The Importance of Considering State Eligibility Requirements for Equitable Unemployment Insurance Access: Lessons from the Great Recession and COVID-19

Abstract

The issue of whether unemployment insurance (UI) is an effective social safety net to protect workers is an ongoing debate among scholars and policymakers. Current research examines UI as an exogenous factor instead of an endogenous one, and economists assume that policymakers want UI to be easily accessible for workers during periods of economic downturn. However, this is not always the case, as policymakers’ decisions as to who should be eligible for UI varies across the country. This paper attempts to provide evidence that UI eligibility is an endogenous factor. As an endogenous factor, the motives of policymakers in selecting eligibility requirements for unemployment benefits comes into question. Preliminary results indicate a statistical significance between the first eligibility requirements to qualify for UI and the recipiency rates for each state, using various controls for race, union density, industry, and employment. The statistical significance implies that policymakers may assign specific eligibility requirements that create barriers for displaced workers in receiving UI. The preliminary finding also provides more insight into the contention of the efficacy of UI. The data used is compiled from various sources from the US Department of Labor, state UI recipiency rates, and the Community Pulse Survey, examining data from 2006 through 2021 using the variation of the Great Recession of 2008.

Felipe Juan

Visiting Assistant Professor for the AEA Summer Program at Howard University.

Felipe Juan is a recent graduate of the Economics PhD program at Howard University.