Discussion on Nakajima�s "A Quantitative Analysis ofUnemployment Bene�t Extensions"

Marco Cozzi

Queen�s University

AEA Meetings Chicago 2012

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 1 / 10

UI Extensions - Why Do We Care?

Great Recession ! soaring costs of the UI program.

Potential issue with UI extensions: distortions in the search margin.

This paper: too much insurance vis-à-vis incentives, unemployedpeople are enjoying leisure at the expenses of lucky/productiveworkers.

It accounts for a third of the increase in the unemployment rate!

Additional issue (not here): who pays for the costs? Futuredistortionary taxation and RE.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 2 / 10

UI Extensions - Why Do We Care?

Great Recession ! soaring costs of the UI program.

Potential issue with UI extensions: distortions in the search margin.

This paper: too much insurance vis-à-vis incentives, unemployedpeople are enjoying leisure at the expenses of lucky/productiveworkers.

It accounts for a third of the increase in the unemployment rate!

Additional issue (not here): who pays for the costs? Futuredistortionary taxation and RE.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 2 / 10

UI Extensions - Why Do We Care?

Great Recession ! soaring costs of the UI program.

Potential issue with UI extensions: distortions in the search margin.

This paper: too much insurance vis-à-vis incentives, unemployedpeople are enjoying leisure at the expenses of lucky/productiveworkers.

It accounts for a third of the increase in the unemployment rate!

Additional issue (not here): who pays for the costs? Futuredistortionary taxation and RE.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 2 / 10

UI Extensions - Why Do We Care?

Great Recession ! soaring costs of the UI program.

Potential issue with UI extensions: distortions in the search margin.

This paper: too much insurance vis-à-vis incentives, unemployedpeople are enjoying leisure at the expenses of lucky/productiveworkers.

It accounts for a third of the increase in the unemployment rate!

Additional issue (not here): who pays for the costs? Futuredistortionary taxation and RE.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 2 / 10

UI Extensions - Why Do We Care?

Great Recession ! soaring costs of the UI program.

Potential issue with UI extensions: distortions in the search margin.

This paper: too much insurance vis-à-vis incentives, unemployedpeople are enjoying leisure at the expenses of lucky/productiveworkers.

It accounts for a third of the increase in the unemployment rate!

Additional issue (not here): who pays for the costs? Futuredistortionary taxation and RE.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 2 / 10

U.S. Labor Market Facts (Cooley-Rupert Report)

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 3 / 10

U.S. Labor Market Facts (Cooley-Rupert Report)

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 4 / 10

"Pro�s"

Very carefully executed (institutional details).

A structural model can consider the speci�c nature of the enacted UIextensions.

Can study interesting and relevant counterfactuals.

Serious robustness analysis.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 5 / 10

"Pro�s"

Very carefully executed (institutional details).

A structural model can consider the speci�c nature of the enacted UIextensions.

Can study interesting and relevant counterfactuals.

Serious robustness analysis.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 5 / 10

"Pro�s"

Very carefully executed (institutional details).

A structural model can consider the speci�c nature of the enacted UIextensions.

Can study interesting and relevant counterfactuals.

Serious robustness analysis.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 5 / 10

"Pro�s"

Very carefully executed (institutional details).

A structural model can consider the speci�c nature of the enacted UIextensions.

Can study interesting and relevant counterfactuals.

Serious robustness analysis.

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 5 / 10

"Con�s"

Nature, persistence and propagation mechanism of the aggregateshock.

Is the shock just a productivity shock, or it might relate to thee¢ ciency of matching too?

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 6 / 10

"Con�s"

Nature, persistence and propagation mechanism of the aggregateshock.

Is the shock just a productivity shock, or it might relate to thee¢ ciency of matching too?

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 6 / 10

Beveridge Curve, JOLTS

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 7 / 10

Beveridge Curve in the Past, HWPAI (Cleveland FED)

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 8 / 10

"Con�s"

There are no skill mismatch considerations.

Employers learning on unemployed types (Kubler-Saint Paul JLE 04).

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 9 / 10

"Con�s"

There are no skill mismatch considerations.

Employers learning on unemployed types (Kubler-Saint Paul JLE 04).

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 9 / 10

Job Openings Vs. Separations

Cozzi (Queen�s University ) Nakajima - Discussion AEA Meetings Chicago 2012 10 / 10