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Racial Inequality in the U.S. Unemployment Insurance System

Author

Listed:
  • Daphné Skandalis
  • Ioana Marinescu
  • Maxim N. Massenkoff

Abstract

The decentralized US unemployment insurance (UI) system lets states decide on key rules. Decentralization could help states efficiently adapt to local economic conditions, but it could also generate racial inequality. We build a novel nationally representative dataset of UI claimants and document a 18:3% gap in UI entitlements between Black and white claimants. After accounting for claimants' work history, we show that state rules differences alone create a 8:4% racial gap. Yet, our welfare analysis indicates that state rules differences are inefficient. Reducing UI rule disparities across states would thus enhance both racial equity and economic efficiency.

Suggested Citation

  • Daphné Skandalis & Ioana Marinescu & Maxim N. Massenkoff, 2022. "Racial Inequality in the U.S. Unemployment Insurance System," NBER Working Papers 30252, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30252
    Note: LE PE
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    Cited by:

    1. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2024. "Unemployment risk, portfolio choice, and the racial wealth gap," CRC TR 224 Discussion Paper Series crctr224_2024_508, University of Bonn and University of Mannheim, Germany.
    2. Jonathan Cohen & Geoffrey C. Schnorr, 2024. "Efficiency Costs of Unemployment Insurance Denial: Evidence from Randomly Assigned Examiners," Upjohn Working Papers 24-404, W.E. Upjohn Institute for Employment Research.
    3. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2024. "Unemployment Risk, Portfolio Choice, and the Racial Wealth Gap," Opportunity and Inclusive Growth Institute Working Papers 086, Federal Reserve Bank of Minneapolis.
    4. Bastian, Jacob E. & Black, Dan A., 2024. "Relaxing financial constraints with tax credits and migrating out of rural and distressed America," Journal of Public Economics, Elsevier, vol. 234(C).
    5. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2023. "Unemployment Risk, Portfolio Choice, and the Racial Wealth Gap," ECONtribute Discussion Papers Series 265, University of Bonn and University of Cologne, Germany.
    6. Ellora Derenoncourt & Chi Hyun Kim & Moritz Kuhn & Moritz Schularick, 2023. "Unemployment Risk, Portfolio Choice, and the Racial Wealth Gap," Working Papers 332, Princeton University, Department of Economics, Center for Economic Policy Studies..

    More about this item

    JEL classification:

    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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