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Labor market shocks and retirement: Do government programs matter? (Coile & Levine 2007)

Absence of conflict of interest.

Citation

Coile, C., & Levine, P. (2007). Labor market shocks and retirement: Do government programs matter? Journal of Public Economics, 91(10), 1902-1919.

Highlights

  • The study examined the impact of the generosity of unemployment insurance (UI) benefits on retirement decisions.
  • The study used a statistical model and data from the March Current Population Survey for 1980–2004 to estimate impacts.
  • The study found no relationship between the generosity of UI benefits and the likelihood of retirement or receipt of UI.
  • The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before changes in the generosity of UI benefits were observed. This means we are not confident that the estimated effects are attributable to changes in the generosity of UI benefits; other factors are likely to have contributed.

Intervention Examined

Unemployment Insurance (UI)

Features of the Intervention

UI programs offer monetary benefits to eligible workers who meet eligibility requirements. Typically, workers who lost a job through no fault of their own, are actively looking for work, and had a sufficient work history before job loss are eligible for UI benefits. States administer UI benefits with oversight from the U.S. Department of Labor and vary in both the eligibility requirements and the benefits offered. On average, benefits replace approximately 35 percent of a worker’s lost earnings.

Features of the Study

The authors used a statistical model to estimate the likelihood of transitioning to retirement based on variations in the maximum UI benefit amount and the ease of meeting work history eligibility requirements, which vary by state and year.

Findings

Employment

  • The study found no statistically significant relationships between changes in the maximum UI benefit amount or work history requirements and the likelihood of retirement.

Public benefit receipt

  • The study also found no statistically significant relationships between changes in the maximum UI benefit amount or work history requirements and receipt of UI for older workers.

Considerations for Interpreting the Findings

Although the study used regression models that controlled for age and race, the authors did not account for other existing differences between groups being compared in different states and years. These existing differences between the groups—and not UI generosity—could explain the observed differences in outcomes.

Causal Evidence Rating

The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before observing changes in the generosity of UI benefits. This means we are not confident that the estimated effects are attributable to changes in the generosity of UI benefits; other factors are likely to have contributed.

Reviewed by CLEAR

November 2018

Topic Area