UI Generosity and Job Acceptance: Effects of the 2020 CARES Act

Summary

This working paper, authored by Nicolas Petrosky-Nadeau and Robert G. Valletta, examines the effects of the 2020 CARES Act on job acceptance rates. The study focuses on the impact of increased unemployment insurance (UI) generosity on individuals' decisions to accept job offers. The authors analyze data from the Federal Reserve Bank of San Francisco and provide insights into the labor market dynamics during the COVID-19 pandemic.

Introduction

The COVID-19 pandemic led to a significant increase in unemployment rates, prompting policymakers to implement measures to support individuals who lost their jobs. The CARES Act, passed in 2020, provided enhanced UI benefits to unemployed individuals. This paper investigates how the increased UI generosity affected job acceptance rates.

Methodology

The authors utilize data from the Current Population Survey (CPS) and the Job Openings and Labor Turnover Survey (JOLTS) to analyze the relationship between UI generosity and job acceptance. They employ a difference-in-differences approach to compare the job acceptance rates before and after the implementation of the CARES Act.

Results

The study finds that the increased UI generosity under the CARES Act had a significant negative effect on job acceptance rates. The authors observe a decline in the likelihood of individuals accepting job offers during the period of enhanced UI benefits. This effect is particularly pronounced for low-wage workers and those in industries most affected by the pandemic.

Implications

The findings of this study have important implications for policymakers and labor market dynamics. The results suggest that the increased UI generosity may have created disincentives for individuals to return to work. This could potentially prolong the recovery of the labor market and hinder economic growth.

Conclusion

In conclusion, this working paper provides evidence of the impact of the 2020 CARES Act on job acceptance rates. The study suggests that the increased UI generosity had a negative effect on individuals' willingness to accept job offers. These findings highlight the need for policymakers to carefully consider the design and duration of UI benefits to ensure they do not create unintended consequences in the labor market.

References

Petrosky-Nadeau, N., & Valletta, R. G. (2020). UI Generosity and Job Acceptance: Effects of the 2020 CARES Act. Federal Reserve Bank of San Francisco Working Paper Series. Retrieved from link to paper

Publication source

See the PDF from which this article has been generated: PDF source url: https://www.frbsf.org/economic-research/wp-content/uploads/sites/4/wp2021-13.pdf