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How Income Changes During Unemployment: Evidence from Tax Return Data

How Income Changes During Unemployment: Evidence from Tax Return Data <p>We use a panel of tax returns spanning 1999 to 2011 to provide evidence on household experiences during unemployment. A period of unemployment is associated with a 20 percent reduction in annual household wage earnings. Unemployment insurance (U.I.) compensates for half of lost wages. Households also partially compensate using a variety of income sources. Distributions from retirement accounts increase in the short run. Self-employment income and disability insurance payments increase over longer periods. More generous U.I. benefits crowd out wage income and are associated with increased retirement account distributions. This combination of responses is consistent with U.I. benefits lengthening unemployment spells.</p> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Human Resources University of Wisconsin Press

How Income Changes During Unemployment: Evidence from Tax Return Data

Journal of Human Resources , Volume 52 (2) – May 10, 2017

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Publisher
University of Wisconsin Press
Copyright
©by the Board of Regents of the University of Wisconsin System
ISSN
1548-8004

Abstract

<p>We use a panel of tax returns spanning 1999 to 2011 to provide evidence on household experiences during unemployment. A period of unemployment is associated with a 20 percent reduction in annual household wage earnings. Unemployment insurance (U.I.) compensates for half of lost wages. Households also partially compensate using a variety of income sources. Distributions from retirement accounts increase in the short run. Self-employment income and disability insurance payments increase over longer periods. More generous U.I. benefits crowd out wage income and are associated with increased retirement account distributions. This combination of responses is consistent with U.I. benefits lengthening unemployment spells.</p>

Journal

Journal of Human ResourcesUniversity of Wisconsin Press

Published: May 10, 2017

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