Existing estimates of the MVPF don’t account for this take-up response, and so they overstate the cost-effectiveness of raising benefits.

If this is the measure we use to decide where to put tax dollars, this difference meaningfully shifts policy priorities.

Combining theory and empirics, we quantify the policy implications. Accounting for endogenous take-up:
- Lowers the optimal benefit level by 27% ($633➡️$451)
- Reduces the marginal value of public funds (MVPF) by 29 percent (0.90➡️0.66)

Optimal policy depends on total benefit payments, whether from higher take-up or longer claims. We already knew that the duration elasticity enters the optimal policy condition, but the insight from this paper is that the take-up elasticity belongs there as well

Our results suggest that a 10% increase in weekly benefit would increase take-up by 4.7%, which drives a 6.2% increase in the number of benefit payments

After a job separation, a worker needs to file an initial claim, and then a ``waiting week’’ claim that will not be paid out, and then another claim the following week that can result in payment. We track workers from their job separation through these steps.

When take-up is incomplete, it becomes a potential margin through which workers respond to policy. In fact, one-third of non-claimants cited either benefit levels or hassle costs as a reason for not taking up UI.

🚨🚨🚨 MY JOB MARKET PAPER 🚨🚨🚨
"Incomplete and Endogenous Take-Up of Unemployment Insurance Benefits" (with Brendan Moore)

➡️ We study how the generosity of UI benefits affects take-up and the implications for optimal policy.

Lastly, we use the Marginal Value of Public Funds (MVPF) framework to compare the value of expanding UI eligibility against raising benefit levels or extending benefit duration.

We find lowering the eligibility threshold is the most cost-effective UI policy studied to date.

When we look at earnings, we see a similar pattern. The effect on earnings is even more persistent in the quarters following job loss.

UI recipients earn $~15k more than non-recipients over the two years following job loss. (50%⬆️)

The delay in re-employment is only 20 hours of work in the quarter in which the job loss occurred.

Even more surprisingly, we find large increases in hours worked in the following quarters.

UI recipients work ~600 MORE hours over the two years following job loss. (37%⬆️)

🚨🚨🚨 NEW WORKING PAPER: "The Benefits of UI for Marginally Attached Workers" with Brendan Moore

➡️ We find that UI minimally delays re-employment, but substantially improves labor market outcomes for low-income workers

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If you had bought in just before The Great Recession, then it would have taken six years to return to that level. Even if you bought six months in when it seemed like it had stabilized, you would've waited four years