Generous on Paper, Accessible in Practice? Unemployment Insurance Generosity and Benefit Reach across US States

• In Event: Unemployment Insurance, Administrative Capacity, and Labor Market Outcomes

Abstract

Background
Unemployment insurance (UI) is designed to provide temporary income support to workers who lose their jobs involuntarily. A growing body of research has documented the substantial benefits of UI; receipt of unemployment benefits helps lift low-income households out of poverty (Moffitt & Ko, 2024) and substantially improves the quality of subsequent employment (McQuillan & Moore, 2025). Yet, states vary considerably in their UI provisions. To better capture this cross-state diversity, we developed a composite index evaluating the generosity of UI programs based on formal rules, including eligibility criteria, benefit levels, and work requirements. Using this index, we find that Connecticut, New Jersey, and Maine have the most generous UI programs, while South Carolina, Louisiana, and Missouri are the least generous. However, the generosity of formal rules may not fully translate into program performance, as administrative complexity, stringent work search requirements, and bureaucratic barriers can limit workers' ability to access and sustain benefits in practice.

Research Question
In this study, we examine whether states with more generous formal rules also demonstrate stronger program outcomes in practice. To assess actual UI program performance, we focus on two dimensions. First, the recipiency rate measures the overall reach of UI among the jobless population, defined as the number of insured unemployed as a percent of total unemployed. Second, the exhaustion rate captures whether recipients are able to collect benefits through the full entitlement period which captures not only reemployment outcomes but also the potential role of administrative burdens in cutting benefits short.

Data and Method
The UI generosity index was constructed as a state-level panel dataset covering 2012–2020, reflecting key dimensions of UI program rules including monetary and nonmonetary eligibility, benefit level, and work requirements. The primary data source is the Comparison of State Unemployment Insurance Laws published annually by the U.S. Department of Labor (DOL). We estimated both fixed effects and random effects models for each outcome, with the preferred estimator selected based on the Hausman specification test. Several state-level control variables were included: poverty rate, Democratic and Republican trifecta indicators, union coverage rate, and log gross state product. 

Preliminary findings
Initial results suggest that overall UI generosity is not a significant predictor of either recipiency or exhaustion rates. Program reach and benefit sustainability appear to be shaped more by political and economic factors than by formal policy design alone. Among control variables, Republican trifecta government is associated with a statistically significant reduction in the recipiency rate of approximately 4 percentage points. Regarding exhaustion rates, states with larger economies exhibit lower exhaustion rates. In contrast, higher union coverage is associated with higher exhaustion rates, potentially reflecting unions' role in supporting workers to sustain benefit receipt through the full entitlement period.    

Conclusion
These findings suggest that formal UI rules do not fully determine program outcomes. Broader contextual factors, including state economic conditions, political environment, and labor market institutions, appear to play an equally important role in shaping who receives benefits and for how long.

Authors

• Soyun Jeong, University of Hawaii
  Presenting Author

• Ashley M Fox
  Non-Presenting Co-Author