Research / BFI Working PaperJan 21, 2022

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

Gabriel Chodorow-Reich, Peter Ganong, Jonathan Gruber

We model automatic trigger policies for unemployment insurance by simulating a weekly panel of individual labor market histories, grouped by state. We reach three conclusions: (i) policies designed to trigger immediately at the onset of a recession result in benefit extensions that occur in less sick labor markets than the historical average for benefit extensions; (ii) the ad hoc extensions in the 2001 and 2007-09 recessions compare favorably ex post to common proposals for automatic triggers; (iii) compared to ex post policy, the cost of common proposals for automatic triggers is close to zero.

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