| This paper embeds the benefit structure of the U.S. unemployment insurance (UI) program in a partial job search dynamic programming model and estimates parameters with NLSY 1979 data on low-skilled young white males. The estimated model provides insight into several unsettled questions: the contribution of UI to steady-state unemployment levels (approximately 0.5 percentage point); the effect of UI on post-unemployment earnings (1.9% higher for benefit recipients), and the total costs and benefits under alternate program structures. The model permits simulation of program modifications such as extending benefits, relaxing eligibility requirements, and replacing weekly benefits with a lump-sum payment. |
