@TechReport{iza:izadps:dp13331, author={Johnston, Andrew C. and Mas, Alexandre}, title={Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut}, year={2020}, month={Jun}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={13331}, url={https://www.iza.org/publications/dp13331}, abstract={We examine how a 16-week cut in potential unemployment insurance (UI) duration in Missouri affected search behavior of UI recipients and the aggregate labor market. Using a regression discontinuity design (RDD), we estimate a marginal effect of maximum duration on UI and nonemployment spells of approximately 0.45 and 0.25 respectively. We use the RDD estimates to simulate the unemployment rate assuming no market-level externalities. The simulated response, which implies almost a one percentage point decline in the unemployment rate, closely approximates the estimated change in the unemployment rate following the benefit cut. This finding suggests that, even in a period of high unemployment, the labor market absorbed this influx of workers without crowding-out other jobseekers.}, keywords={unemployment;unemployment insurance;labor supply;benefits;employment}, }