Joint Labor Economics & Brooks School Workshop: David Wasser

David Wasser, Cornell University, PhD Student

Unemployment Insurance Extensions, Labor Market Concentration, and Match Quality

Abstract: This paper investigates how unemployment insurance (UI) extensions affect the quality of new matches across the distribution of local labor market concentration. I exploit measurement error in state unemployment rates that led to quasi-random assignment of UI durations in the U.S. during the Great Recession. Using matched employer-employee data from the Longitudinal Employer-Household Dynamics program, I find that UI extensions lengthen nonemployment durations by one week and cause economically meaningful but not statistically significant increases in earnings. These effects are not significantly different across the distribution of concentration, but I find suggestive evidence of non-linear effects of UI with respect to concentration. In addition, workers exposed to higher levels of concentration are more likely to change workplaces and industries following a UI extension, but this mobility does not lead them to match into less-concentrated labor markets. My results imply that UI extensions neither counteract nor worsen the negative outcomes associated with labor market concentration.