UI Generosity and Job Acceptance: Effects of the 2020 CARES Act

2021-13 | May 1, 2023

We assess labor market effects of the CARES Act $600 UI supplement. We start with direct empirical analyses of labor force transitions using monthly CPS data and imputed UI benefits. The results show moderate disincentive effects of the supplement on job finding. We rationalize this result in a dynamic model of job acceptance decisions that yields a reservation level of UI benefits at which a recipient is indifferent between unemployment and employment at their prior wage. Calculations based on the model confirm that only a small fraction of recipients of the enhanced UI benefits were likely to reject job offers.

Article Citation

Petrosky-Nadeau, Nicolas, and Robert G. Valletta. 2021. “UI Generosity and Job Acceptance: Effects of the 2020 CARES Act,” Federal Reserve Bank of San Francisco Working Paper 2021-13. Available at https://doi.org/10.24148/wp2021-13

About the Authors
Nicolas Petrosky-Nadeau
Nicolas Petrosky-Nadeau is a vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Nicolas Petrosky-Nadeau
Robert G. Valletta
Robert G. Valletta is senior vice president and associate director of research in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Robert G. Valletta