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Why Is Insured Unemployment So Low?

  • Design
  • Economics


Why is Insured Unemployment so Low? GARY BURTLESS Brookings Institution Why Is Insured Unemployment So Low? THE NATION'S unemployment rate has risen to new post-Depression highs since 1980. But at the same time the number of persons receiving unemployment compensation benefits has been unusually low relative to the total number of unemployed. Two types of state and federal programs are involved in this development: regular unemployment benefits and extended and supplemental benefit programs. The regular unemployment compensation program provides benefits for a duration of about six months (twenty-six weeks) to workers on temporary or permanent layoff and to certain unemployed workers who quit theirjobs forjust cause. Extended and supplemental unemployment compensation programs provide benefits lasting three or more additional months to workers who exhaust their regular benefits. During the recent recession the number of recipients of regularjobless benefits was low in comparison to the number of workers who lost their jobs. This development affected the insured unemployment rate (IUR), which is one of the nation's two most important measures of slack in the labor market. The IUR is essentially the number of recipients of regular benefits divided by the total number of jobs covered by the unemploy- ment insurance system.' Since the numerator of this ratio is available Support for this research was partly provided by the Employment and Training Administration, U.S. Department of Labor, under contract 20-11-82-12. 1 am grateful for the substantial contribution of Daniel H. Saks, who participated in the design of this project, and for research assistance provided by Karen Hanovice. I thank Edward Fu, Joseph E. Hight, James van Erden, and Ronald Willus of the Department of Labor and Geoffrey 0. Carliner, John F. Earl, Thomas J. Kniesner, and Robert A. Moffitt for their help. The views expressed here are my own and do not represent those of Brookings or the Depa

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