%0 Report
        %A Mitman, Kurt
%A Rabinovich, Stanislav
        %T Whether, When and How to Extend Unemployment Benefits: Theory and Application to COVID-19
        %D 2021
        %8 2021 Jan
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 14085
        %U https://www.iza.org/index.php/publications/dp14085
        %X We investigate the optimal response of unemployment insurance to economic shocks, both with and without commitment. The optimal policy with commitment follows a modified Baily-Chetty formula that accounts for job search responses to future UI benefit changes. As a result, the optimal policy with commitment tends to front-load UI, unlike the optimal discretionary policy. In response to shocks intended to mimic those that induced the COVID-19 recession, we find that a large and transitory increase in UI is optimal; and that a policy rule contingent on the change in unemployment, rather than its level, is a good approximation to the optimal policy.
        %K unemployment insurance
%K unemployment
%K optimal policy
%K COVID-19