As we debate whether to cut UI benefits in the middle of the pandemic, it's useful to keep in mind what we know about the impact of the $600 benefit boost on consumption and employment.

TL;DR they raised consumption quite a bit. However, had little discernible impact on emp.

1/

Research by @p_ganong & others using JPMCI data suggests the UI benefit boost played the key role in explaining the very strong rebound of consumption following receipts of UI benefits.

The response is larger than in past recessions & makes for very effective stimulus. 2/

Link to the JPMCI paper showing the positive consumption effect of the $600/week UI boost. https://institute.jpmorganchase.com/institute/research/labor-markets/report-consumption-effects-of-unemployment-insurance-during-the-covid-19-pandemic
3/.

Did UI hold back jobs recovery? According to a recent study by Yale economists (Altonji and coauthors), there is little indication of this. They compared groups with high versus low benefit replacement rates. Following passage of CARES, little difference in emp trajectory.
4/

Here is link to the Altonji et al paper.
https://tobin.yale.edu/sites/default/files/files/C-19%20Articles/CARES-UI_identification_vF(1).pdf
5/

@ernietedeschi also did analysis of his own on this question, and comparing workers with different replacement rates found little indication that UI held back jobs recovery.
https://twitter.com/ernietedeschi/status/1283832188434362368

6/

There's a theoretical possibility that high benefits impact jobs, but not happening right now in reality. Also, incentivizing workers to search harder when unemployment is very high is partly self defeating ("musical chairs"). But UI is a very effective stimulus measure. 7/7