Research / BFI Working PaperAug 24, 2020

US Unemployment Insurance Replacement Rates During the Pandemic

We use micro data on earnings together with the details of each state’s unemployment insurance (UI) system to compute the distribution of UI benefits after the uniform $600 Federal Pandemic Unemployment Compensation (FPUC) supplement implemented by the CARES Act. We find that between April and July 2020, 76% of workers eligible for regular Unemployment Compensation have statutory replacement rates above 100%, meaning that they are eligible for benefits which exceed lost wages. The median statutory replacement rate is 145%. We also compute comprehensive replacement rates, which account for employer provided non-wage compensation and differential tax treatment of labor income and UI. 69% of UI-eligible unemployed have comprehensive replacement rates above 100% and the median comprehensive replacement rate is 134%. The presence of the FPUC has important implications for the incidence of the recession and reverses income patterns which would have otherwise arisen across income levels, occupations, and industries.

More Research From These Scholars

BFI Working Paper Jul 21, 2020

Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data

Natalie Cox, Peter Ganong, Pascal Noel, Joseph S. Vavra, Arlene Wong, Diana Farrell, Fiona Greig
Topics:  COVID-19
BFI Working Paper Jan 21, 2022

Should We Have Automatic Triggers for Unemployment Benefit Duration and How Costly Would They Be?

Gabriel Chodorow-Reich, Peter Ganong, Jonathan Gruber
Topics:  Economic Mobility & Poverty
BFI Working Paper Jan 8, 2024

Refinancing Frictions, Mortgage Pricing and Redistribution

David W. Berger, Konstantin Milbradt, Fabrice Tourre, Joseph S. Vavra
Topics:  Financial Markets