Conference Agenda

In July 2017, Lithuania moved toward flexicurity by significantly increasing the generosity of unemployment insurance (UI) while simultaneously decreasing firing costs. We use administrative data on all Lithuanian workers to quantify labor market effects of i) the reform, which increased the potential benefit duration and the monthly benefit level by 50 percent, and ii) variation in severance pay. We find that the elasticity of the non-employment duration w.r.t. a proportional increase in both policy parameters is between 0.4 and 0.6, and the elasticity of the benefit duration is between 0.7 and 0.8, suggesting a substantial fiscal cost. On the other hand, receiving severance pay increases the probability of survival in non-employment in the first months of unemployment by 5 percentage points. This suggests that liquidity constraints play a relevant role for the unemployed, and additional UI provides valuable insurance. Finally, we find little evidence for a reform effect on re-employment wages.

What is the role of income in driving the choice to claim disability benefits, and how can broader benefit policy affect that? We study three UK reforms which cut non-disability benefits and find that each increased the number of individuals receiving disability benefits, with an elasticity of claims to incomes between -0.4 and -1.1. Our results provide causal evidence that disability benefits provide insurance against non-health related shocks. These effects have implications for the optimal level of non-disability benefit generosity, and the savings policymakers might hope to generate from benefit cuts.

While previous work documents the added worker effect within couples, where wives increase labor supply when husbands become unemployed, this paper studies the added worker effect within broader family networks, focusing on parents and children, using involuntary job displacement from mass layoffs in an event study framework. The paper also examines the role of unemployment insurance (UI) generosity in shaping family labor supply responses. The net effect of UI generosity is theoretically ambiguous: direct income support may reduce the need for family assistance, but longer unemployment spells induced by generous UI could increase reliance on family networks. Using comprehensive administrative data from the Netherlands, I exploit sharp discontinuities in maximum UI entitlement at employment history thresholds as exogenous variation. A regression discontinuity design identifies spillover effects on family members’ labor outcomes: longer UI entitlement increases benefit duration for the unemployed, while spouses, parents, and adult children adjust their labor supply.

This paper studies social insurance with imperfect eligibility screening, focusing on Unemployment Insurance during its expansion in 2020-21. We study the extent of imperfect screening by identifying anomalous payments using administrative tax data and UI policies, finding $214 billion in potentially-improper payments—concentrated in the Pandemic Unemployment Assistance (PUA) program—with half detectable ex-ante through improved data sharing. There is substantial geographic variation, and a border design shows this is partly due to state policy decisions. To assess implications for optimal policy, we first conduct simulations that replace PUA with means tested, lump-sum transfers, finding these transfers would have better insured against income losses at lower administrative cost. Second, we develop a model of opt-in versus automatic transfers that shows the targeting advantage of opt-in programs can reverse when ineligible recipients pass the benefit screen. Calibrated to 2020 UI, the model implies that shifting toward automatic transfers would have increased social welfare.