A new paper from the National Bureau of Economic Research studies the effects of special pandemic-era unemployment benefits on employment by analyzing data from the Current Population Survey. The study focuses on the 18 states that stopped participating in the Federal Pandemic Unemployment Compensation (FPUC) and Pandemic Unemployment Assistance (PUA) programs in June 2021.
The authors use difference-in-differences and event study estimators to estimate the effect of the early termination of pandemic-era UI benefits on the flows from unemployment to employment. They find that early termination is associated with a 14 percentage point increase in the unemployment-to-employment flow among unemployed workers ages 25 to 54.
This effect is slightly smaller for other groups of workers, such as those with less than a college degree and those ages 16-64. The study also explores potential threats to the validity of the estimates and finds that the results support a causal interpretation.
Read the full paper here.