The Impact of the Federal Pandemic Unemployment Compensation on Job Search and Vacancy Creation

41 Pages Posted: 11 Mar 2021

See all articles by Ioana Elena Marinescu

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice; National Bureau of Economic Research (NBER)

Daphné Skandalis

Federal Reserve Banks - Federal Reserve Bank of New York

Daniel Zhao

Glassdoor, Inc.

Multiple version iconThere are 2 versions of this paper

Date Written: March 10, 2021

Abstract

During the COVID-19 pandemic, the Federal Pandemic Unemployment Compensation (FPUC) increased US unemployment benefits by $600 a week. Theory predicts that FPUC will decrease job applications, and could decrease vacancy creation. We estimate the effect of FPUC on job applications and vacancy creation week by week, from March to July 2020, using granular data from the online jobs platform Glassdoor. We exploit variation in the proportional increase in benefits across local labor markets. To isolate the effect of FPUC, we flexibly allow for different trends in local labor markets differentially exposed to the COVID-19 crisis. We verify that trends in outcomes prior to the FPUC do not correlate with future increases in benefits, which supports our identification assumption. First, we find that a 10% increase in unemployment benefits caused a 3.6% decline in applications, but did not decrease vacancy creation; hence, FPUC increased tightness (vacancies/applications). Second, we document that tightness was unusually depressed during the FPUC period. Altogether, our results imply that the positive effect of FPUC on tightness was welfare improving: FPUC decreased competition among applicants at a time when jobs were unusually scarce. Our results also help explain prior findings that FPUC did not decrease employment.

Keywords: unemployment insurance, job vacancies, job applications, COVID-19

JEL Classification: J63, J64, J65

Suggested Citation

Marinescu, Ioana Elena and Skandalis, Daphné and Zhao, Daniel, The Impact of the Federal Pandemic Unemployment Compensation on Job Search and Vacancy Creation (March 10, 2021). Available at SSRN: https://ssrn.com/abstract=3801802 or http://dx.doi.org/10.2139/ssrn.3801802

Ioana Elena Marinescu (Contact Author)

University of Pennsylvania - School of Social Policy & Practice ( email )

3701 Locust Walk
Philadelphia, PA 19104-6214
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Daphné Skandalis

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Daniel Zhao

Glassdoor, Inc. ( email )

Mill Valley, CA 94941
United States

HOME PAGE: http://https://www.glassdoor.com/research

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
360
Abstract Views
3,638
rank
94,425
PlumX Metrics