Research / BFI Working PaperAug 25, 2023

Spending and Job-Finding Impacts of Expanded Unemployment Benefits: Evidence from Administrative Micro Data

Peter Ganong, Fiona Greig, Pascal Noel, Daniel M. Sullivan, Joseph S. Vavra

We show that the largest increase in unemployment benefits in U.S. history had large spending impacts and small job-finding impacts. This finding has three implications. First, increased benefits were important for explaining aggregate spending dynamics—but not employment dynamics—during the pandemic. Second, benefit expansions allow us to study the MPC of normally low liquidity households in a high-liquidity state. These households still have high MPCs. This suggests a role for permanent behavioral characteristics, rather than just current liquidity, in driving spending behavior. Third, the mechanisms driving our results imply that temporary benefit supplements are a promising countercyclical tool.

More Research From These Scholars

BFI Working Paper May 22, 2019

Why Has Regional Income Convergence in the U.S. Declined?

Peter Ganong, Daniel Shoag
Topics:  Uncategorized
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 Oct 7, 2021

Preferences for Giving Versus Preferences for Redistribution

Johanna Mollerstrom, Avner Strulov-Shlain, Dmitry Taubinsky
Topics:  Fiscal Studies