Disemployment Effects of Unemployment Insurance: A Meta-Analysis

We systematically review studies of how unemployment benefits affect unemployment duration. Statistically significant findings are eleven times more likely to be published. Correcting for publication bias reduces average elasticity by a factor of two. Meta-analysis provides a principled way for sufficient statistics methods to aggregate estimates across policy contexts and speak to the optimality of large reforms. Although existing consumption drop-based approaches typically imply an optimal replacement rate near zero, our corrected estimates imply an optimal replacement rate of 28%. The “micro” elasticity is equal to the “macro” elasticity, suggesting that general equilibrium effects are unimportant or cancel out.