Distributional Equity in the Unemployment Insurance System

Abstract

This study examines the distribution of unemployment insurance benefits across income classes. The new data presented here support previous claims that a large share of unemployment insurance benefits flow to middle- and upper-income groups. The data also show, however, that earlier studies underestimated the extent to which lower income groups benefit from the program. In addition, the paper investigates whether the household survey data used in studies such as this are so flawed by reporting errors that they yield biased results. The author concludes that such errors have only a minimal effect. The paper closes with an analysis of why upper income groups receive a relatively large share of unemployment insurance benefits.