Association for Public Policy Analysis & Management

The Unemployment Insurance (UI) program was the largest safety net program during the Great Recession, providing cash benefits to more than 10 million unemployed individuals during this period (Vroman et al., 2011). While the literature on the effects of UI on job search and unemployment duration has been extensive, research on the benefits of the program has been limited. Understanding these potential benefits is key to designing the optimal level of UI. Given that job loss has been associated with decreased health and increased mortality, this paper uses the 1993--2012 Behavioral Risk Factor Surveillance System (BRFSS) and Survey of Income and Program Participation (SIPP) to empirically estimate whether UI generosity mitigates any of the negative health effects of job loss. The empirical strategy relies on exploiting variation in the generosity of UI benefits caused by exogenous changes in state UI laws, similar to Gruber (1997). The results show higher UI generosity increases health insurance coverage and health utilization and improves self-reported health. Moreover, I find that these effects are stronger during periods of higher unemployment rates. Finally, I find no strong effects on healthy or risky behaviors, nor on health conditions such as diabetes and blood pressure.