Unemployment Insurance, Starting Salaries, and Jobs: Evidence from Multi-state Firms

Seven U.S. states permanently cut unemployment insurance (UI) benefits by 30–64 percent between 2011 and 2014, providing the study’s quasi-experimental variation. North Carolina enacted the largest reform: maximum duration fell from 26 weeks to 12–20 weeks and maximum weekly benefits fell from $535 to $350, an average total reduction of 64 percent. Six “moderate reform” states (FL, GA, KS, MI, MO, SC) cut duration only, by an average of 30 percent (26→18 weeks). Using a multi-state firm identification strategy — comparing establishments of the same firm operating in reform states against the same firm’s establishments in non-reform states, with establishment and firm×year fixed effects — the paper estimates causal effects of UI cuts on employment (EEOC, 946K–1.4M establishment-years), starting salaries (Glassdoor, 500K–942K person-years), and posted wages (Burning Glass Technologies, 709K–1.18M establishment-job-quarters). The main results: NC establishments gain +1.3% employment on average relative to same-firm establishments in other states (ATT), reaching +2.1% by year 2; moderate reform states gain +0.8% (ATT). Starting salaries of new hires fall −5.5% in NC and −1.2% in moderate states. Posted wages for the same job within the same firm fall −3.5% in NC and −3.2% in moderate states. The negative co-movement of employment and wages identifies a labor supply shock: workers lower reservation wages in response to reduced outside options; firms take advantage by hiring more at lower wages. Labor demand elasticity: −0.36 (SE 0.21) for NC, −0.42 (SE 0.18) for moderate states. The larger effects in NC relative to moderate reform states are consistent with the larger total benefit reduction; effects are robust to controlling for concurrent right-to-work laws, minimum wage changes, Medicaid expansions, and corporate/personal tax reforms. The paper concludes that large, permanent UI reductions can raise employment but at the cost of lower starting wages.

Why Is Workplace Sexual Harassment Underreported? The Value of Outside Options amid the Threat of Retaliation

Research question and argument

Dahl and Knepper address the long-standing puzzle of why workplace sexual harassment is chronically underreported despite high estimated prevalence. Survey evidence indicates that no fewer than 1 in 28 U.S. workers report annual victimization, yet only 1 in 11,000 workers files a formal charge with the Equal Employment Opportunity Commission (EEOC). Even following the #MeToo movement, formal charges rose only about 10%, leaving an enormous gap unexplained.

Gordon B. Dahl | Macro Paper Warehouse

Unemployment Insurance, Starting Salaries, and Jobs: Evidence from Multi-state Firms

Why Is Workplace Sexual Harassment Underreported? The Value of Outside Options amid the Threat of Retaliation

Research question and argument