Cyclical Effects of the Unemployment Insurance (UI) Program: Final Report

摘要

The report presents an analysis of the effect of the unemployment insurance (UI)program as an automatic stabilizer and of recent changes in that effect. The report discusses the theoretical reasons that would enable the UI program to stabilize, to some extent, the business cycle; then presents some previous empirical evidence of the effect. It reviews the empirical literature concerning the ability of UI to act as a stabilizer. The report describes the methodology that is used to estimate the effect of UI and discusses the results of the estimation. The evidence indicates that the UI system does act as an economic stabilizer although to a relatively minor extent. The evidence is quite strong that a diminution in the ability of UI to act as a stabilizer, in the sense of reducing the decrease in Gross National Product (GNP) and the number of jobs lost during the peak of a recession, took place during the 1980s.