When unemployment insurance benefits are rolled back

In response to the COVID pandemic, Congress expanded unemployment insurance (UI) benefits in three ways. First, it increased the level of benefits through a $600 and then a $300 per week supplement. Second, it expanded the pool of workers who are eligible to receive UI via the Pandemic Unemployment Assistance (PUA) program. Third, it extended the duration of benefits. As the labor market recovers from the COVID recession, policymakers and economists have debated whether generous UI benefits are holding workers back from returning to work. This brief aims to answer two important policy questions central to this debate. First, to what extent have the UI supplements discouraged jobless workers from returning to work? Second, how well targeted and timely are PUA benefits in insuring against income losses?

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