Research

Working Papers

"Biased Beliefs and Job Search: Implications for Optimal Unemployment Insurance"

(Job Market Paper - Updated October 2017)

Abstract: Theoretical models of optimal Unemployment Insurance predict that biased beliefs among the unemployed affect their job search and savings behavior. To date, no reliable data have been used to empirically analyze these predictions. In this paper, I use a novel dataset, the Survey of Unemployed Workers in New Jersey, to evaluate how biased beliefs vary across unemployed workers and how they influence the behavior of those workers. I find that overly-optimistic unemployed workers underestimate the duration of their unemployment, leading them to spend 26 percent less time searching for a job each week than those with a pessimistic bias. These results suggest that unemployed workers with an optimistic bias would benefit from an information "nudge" that encourages increased search effort.

"Do Late-Career Wages Boost Social Security More for Women than Men?" with Matthew S. Rutledge

(Updated May 2018)

Abstract: Any worker who delays claiming Social Security receives a larger monthly benefit due to the actuarial adjustment. Some claimants – particularly women, who are more likely to take time out of the labor force early in their careers – can further increase their benefit if the extra years of work raise their career average earnings by displacing lower-earning years. This study uses the Health and Retirement Study (HRS) linked to earnings records to quantify the impact of women’s late-career earnings on Social Security benefits relative to men’s. The paper finds that the average gain in Social Security retirement benefits from working one additional year raises women's monthly benefits by 8.6 percent, of which 1.6 percent is from late-career earnings. These results suggest that, especially among women, there are additional benefits to delaying claiming and further increasing the retirement age.

Media Mentions: Wall Street Journal; CNBC; Bloomberg

"The Impact of Unemployment Insurance Extensions on Worker Job-Search Behavior"

(Updated May 2018)

Abstract: This paper explores how reservation wages and job search effort respond to extensions of unemployment insurance. Economic theory predicts that reservation wages should rise following an extension of potential benefit duration, while search effort should fall. Previous papers in this literature focus on the end result, which is that UI extensions result in prolonged unemployment spells. Using the Survey of Unemployed Workers in New Jersey, and the UI benefit extension in the United States in November 2009, this paper identifies the worker behaviors that lead to prolonged unemployment durations. Employing hypothesis testing and event study analysis, this study shows there are lagged, significant increases in reservation wages and decreases in search effort following the benefit extension. The results suggest that an alternative model of job search is needed.