Unemployment Insurance serves as a critical income support program for U.S. workers who lose their jobs through no fault of their own. It is also a valuable tool to stabilize the U.S. economy and support workers during recessions and other periods of economic uncertainty, underscoring the potential benefits of expanding eligibility for unemployment insurance.

Within the field of labor economics, it is a well-established finding that more robust Unemployment Insurance benefits lead workers to delay finding work after losing their jobs. At the same time, there is little evidence to date that extended periods of time to search for new jobs allow workers to find better reemployment opportunities. Together, these two empirical insights may discourage policymakers from making UI benefits more generous except amid severe economic downturns, as happened in 2020 during the COVID-19 pandemic and recession.

The reality is more nuanced and may reflect the limits of the comparisons this past research has made. Indeed, our recent study, published in Equitable Growth’s Working Paper series, reveals that expanding UI eligibility for low-income workers largely avoids this presumed trade-off between extended UI benefits and unemployed workers delaying their job search. Specifically, we find that workers who receive Unemployment Insurance minimally delay finding new jobs in the short term, but that short delay ultimately leads them to work more overall as they find more stable and higher-paying jobs.

Our paper compares workers who received Unemployment Insurance with those who did not, whereas most earlier studies compare UI recipients with different weekly benefit amounts or potential durations. This distinction matters because receiving Unemployment Insurance changes workers’ weekly job search requirements and gives them access to reemployment services.

Further, while past research has largely examined higher-income workers or the broader pool of UI claimants, we focus on workers with less stable employment and lower incomes—those who are only marginally attached to the U.S. labor force. The effects of Unemployment Insurance may differ across these groups, especially since workers with fewer financial resources and less consistent work may respond differently to the support and structure that UI benefits provide.

Read the full article about expanding eligibility for unemployment insurance by Casey McQuillan and Brendan Moore at Equitable Growth.