Unemployment Insurance as a Worker Indiscipline Device? Evidence from Scanner Data

Abstract

We provide causal evidence of an ex ante moral hazard effect of unemployment insurance (UI ) by matching plausibly exogenous changes in UI benefit duration across state-weeks during the Great Recession to high-frequency productivity measures from individual supermarket cashiers. Estimating models with date and cashier-register fixed effects, we identify a modest but statistically significant negative relationship between UI benefits and worker productivity. This effect is strongest for more experienced and less productive cashiers, for whom UI expansions are especially relevant. Additional analyses from the American Time Use Survey reveal a similar increase in shirking during periods with increased UI benefit durations. (JEL D82, E32, J22, J24, J65, L81)

Stable Income, Stable Family

“…39 We have also examined the degree to which our measure of unemployment insurance generosity relates to potential benefit duration during the Great Recession when potential duration was expanded from 26 weeks up to 99 weeks. Benefit duration has been shown to have important effects on unemployment duration (Katz and Meyer, 1990;Meyer, 2002;Schmieder, Von Wachter, and Bender, 2012), job search activity amongst unemployed individuals (Marinescu, 2017), and employee effort (Lusher, Schnorr, and Taylor, 2022). The estimated coefficient of potential benefit duration on unemployment insurance generosity from 2008-2013 is very small in magnitude (e.g.…”

“…29 Light and Omori (2004) and Britto (2016) document reductions in the probability of quitting in response to exogenous increase in UI benefit levels whereas Lusher, Schnorr, and Taylor (2022) finds evidence that workers are increasingly likely to shirk when potential benefits are more generous (presumably because they anticipate being able to collect benefits even if they are fired). Researchers have also documented responses would suggest that the main results (in Table 1) are relatively conservative since those estimates only capture the effects in the period of time after an individual's reported month of layoff.…”

Performance measures and worker productivity

“…Figure 2 provides examples of workers' productivity measures which were used in studies published in leading economics journals, and whose findings can be used to inform policymakers and practitioners [1], [2], [3], [4], [5], [6], [7], [8], [9], [10], [11], [12]. The figure shows that performance is not only measurable for low-skilled jobs with routine tasks, but that it can also be measured for rather knowledge-intensive, non-routine professions, such as lawyers, physicians, or scientists.…”

“…Windshield installers: units installed [1] Supermarket cashiers: number of items scanned [2], [3] Call agents: average length of calls [4] Lawyers: number of hours billed, new client revenue [5] Fruit pickers: kilograms of fruits picked [6] Frequency Politicians: number of submitted bills [11] Navy recruiters: number and quality of recruits [12] Teachers: teacher value-added [8] Shifts (daily)…”

“…Figure 2 shows a range of studies that primarily use performance measures showing how quickly a worker performs (i.e. quantity-based studies) [1], [2], [3], [4], [6]. Another group of studies utilize performance measures that are either based on quality, or qualityadjusted measures [7], [8].…”