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Did Pandemic Unemployment Benefits Reduce Employment? Evidence from Early State-Level Expirations in June 2021

Glenn Hubbard National Bureau of Economic Research

Date Posted:: December 21, 2021
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Early termination of pandemic-related UI benefits in 18 states in June 2021 led to a 14pp increase in unemployed workers getting a job, but also increased financial stress. @GlennHubbard

The early termination of pandemic-related Unemployment Insurance (UI) benefits in 18 states in June 2021 led to a significant increase in the transition from unemployment to employment, with a rise of over 13 percentage points, or about 60%, compared to states that maintained benefits. This effect was particularly pronounced among prime-age workers, with a 14.4 percentage point increase after controlling for factors like social-distancing stringency and new Covid cases. The national unemployment rate could have been 0.3 percentage points lower in July and August if all states had ended benefits early. However, the early termination also increased financial stress, as the share of households reporting no difficulty meeting expenses dropped by about five percent.

Takeaways by Macro Roundup^® AI

The 18 states that ended pandemic Unemployment Insurance benefits early in June 2021 saw unemployment-to-employment transitions rise by more than 13 percentage points, about 60%, relative to states that maintained the benefits.
Among prime-age workers, the early termination of pandemic Unemployment Insurance benefits is associated with a 14.4 percentage point increase in the transition from unemployment to employment after controlling for social-distancing stringency and new Covid cases.
Early termination of pandemic Unemployment Insurance benefits also increased financial stress, with the share of households reporting no difficulty meeting expenses falling by about five percent.

Core findings, "....The generosity of Unemployment Insurance (UI) benefits was expanded during the pandemic(FPUC), along with the groups of workers eligible for benefits (PUA). These two programs were set to expire in September 2021, but 18 states opted out of both in June 2021. Using Current Population Survey data, we present difference-in-difference and event study estimates that the flow of unemployed workers into employment increased by around two-thirds following early termination. We construct a counterfactual scenario that implies the national unemployment rate in each of July and August would have been around 0.3 percentage point lower than they were, and the employment-population ratio would have been around 0.1-0.2 percentage point higher than it was, had all states ended FPUC and PUA in June.Expanded eligibility and generosity of UI may have both slowed transitions from unemployment to employment. We also present some suggestive evidence that households with relatively high confidence in their ability to meet expenses may have been less sensitive to the termination of expanded benefits. Finally, we present evidence that early termination reduced the share of households that had no difficulty meeting expenses by five percent. The welfare implications of the early termination of FPUC and PUA are therefore ambiguous..."

“…The possibility that unemployment-to-employment flows were on separate trajectories among states that did and did not withdraw early from pandemic-era UI benefit programs is a potential threat to the validity of our estimates. To explore this possibility, in Figure 1 we present event study evidence for each of these four sample groups. For each, the monthly coefficients from February through May are centered around or close to zero, and are imprecisely estimated. This pattern mitigates concerns about divergent “pre-period” trends and supports a causal interpretation of our estimates. It is also reassuring that the magnitude of the September coefficient falls closer to zero and that the coefficient is statistically insignificant. Since both the “treatment” and “control” states had ended pandemic-era UI programs in September, this finding strengthens confidence in our results for July and August….”

The Evidence

"...Table A1 presents summary data on the relevant characteristics of these two sets of states. This table shows means and standard deviations on the variables we use in the analysis for states that did and did not terminate FPUC and PUA, and during time periods of February-June and July-August 2021, both before and after the early terminations went into effect respectively. These data indicate a sharp rise in transitions from unemployment to employment in the states ending extended benefits after the early withdrawal was implemented, while no such rise is observed in the states that maintained such benefits until September. We also note several other differences between the two sets of states that could likely affect these transition rates, including: higher stringency levels in the earlier period in states not ending benefits, but also declining stringency of restrictions in both sets of states (and especially those not ending benefits); increases in new Covid cases in July and August, especially in states ending extended benefits; and higher education levels in the states not ending FPUC and PUA...."

"...We offer further evidence on transitions from unemployment to employment and their determinants, in these states and time periods, in Table 2. Here, we again present the mean transitions in these states and time periods among the unemployed, as well as the means of social-distancing stringency, new Covid cases, and the share of respondents in the HPS reporting having no difficulty meeting expenses in the previous week. We also present the changes over time in these measures (Column 3), the “unadjusted differences in differences” between these states and time periods in such transitions (Column 4), and the percent changes relative to baseline in these differences (Column 5). The goal of Table 2 is to be as transparent as possible with the data. The summary data indicate a fairly sharp increase of over 13 percentage points in transitions from unemployment to employment in the states ending extended benefits, but not in those allowing them to remain in place. Relative to baseline transitions, the increase is about 60 percent in the states ending benefits, and a four percent decrease those not ending them..... Our results indicate a 13.8 percentage point increase in transitions from unemployment to employment among prime-age workers before controlling for stringency and new cases, rising to 14.4 percentage points after controlling for them. We estimate an 11.6 percentage point increase in transitions among prime-age workers without college degrees (and with controls), and an 11.4 percentage point increase among prime-age workers who last worked in the leisure and hospitality and retail industries. Among workers ages 16-64, the results indicate a 13.3 percentage point increase in transitions, again including control variables. Six of the eight estimates are statistically significant; both estimates on the leisure/hospitality and retail sample are not...."

Harry Holzer, Glenn Hubbard and Michael Strain, "Did Pandemic Unemployment Benefits Reduce Employment? Evidence from Early State-Level Expirations in June 2021," National Bureau Of Economic Research, December 2021, https://www.nber.org/papers/w29575

Impact of education, "... The magnitude of the effect is slightly smaller when we estimate our models on samples of unemployed workers ages 25-54 with less than a college degree (12 percentage points) and of workers ages 16-64 (13 percentage points). Among these samples, the coefficient of interest is statistically significant. Among workers ages 25-54 who last worked in the leisure and hospitality and retail industries, the coefficient magnitude is also smaller (11 percentage points) and the coefficient is statistically insignificant...."

"... We extend this exercise to determine what the national unemployment rate and employment-population ratios would have been if all states opted out of pandemic-era UI programs in June. We estimate that the national unemployment rate in July would have been around 0.3 percentage point lower and the aggregate employment rate in July would have been 0.2 percentage point higher. In August, the unemployment rate would have been around 0.3 percentage point lower and the employment rate about 0.1 percentage point higher. The differences between the actual and counterfactual unemployment and employment rates using estimates from workers ages 16-64 are larger..."

"... Our counterfactual estimates that FPUC and PUA added 0.3 percentage point to the national unemployment rate in each of July and August are quite modest when compared to the likely effect of Covid-19 itself. Data from the September 15-27 Household Pulse Survey (HPS), administered by the U.S. Census Bureau, report that 4 million people were home sick with Covid symptoms or caring for someone in the same situation and 3 million weren’t working because they were worried about Covid. Our estimates may also be modest when compared with the labor market effect of unstable school and day cares. The HPS reported 5 million people were at home looking after kids not in school or day care...."

"...Finally, we note that the welfare implications of the early termination of FPUC and PUA are ambiguous. Decreases in unemployment and increases in employment may be welfare enhancing in many cases. But we also present evidence that early termination increased financial stress. Using HPS data, we find that the share of respondents who report that they had no difficulty meeting expenses in the past seven days dropped by slightly more than two percentage points, or about five percent of the average share from February-June 2021...."

Factoids, "... Among unemployed workers ages 25 to 54, we find that early termination is associated with a 14 percentage point increase in the unemployment-to-employment flow. This effect is over two-thirds the size of the unemployed-to-employed (U-to-E) flow among control states during the February-June 2021 “pre period” (21 percent)...."

The Fairest Way to Reform Social Security May Also Be the Worst Way to Grow the Economy

Andrew Biggs American Enterprise Institute

Date Posted:: May 28, 2026
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Biggs argues that “fair” approaches to restoring Social Security solvency – those that do not cut already accrued benefits – are less effective than “unfair” ones that do, because the latter incentivize increased work effort, raising growth and revenue.

Imagine that Social Security reform follows the fairness model, in which accrued benefits are paid in full but the rate at which future benefits are earned is reduced. A simple way to do this is to increase the payroll tax rate To keep Social Security permanently solvent, meaning through 75 years and beyond, would require an immediate and permanent increase in the payroll tax rate [from] 12.4% to 17.6%. The higher rate would decrease labor supply and reduce economic growth. [Consider] an alternate reform, which looks clearly unfair: fix Social Security’s funding gap entirely by reducing accrued benefits that Americans already have earned. As of 2025, Americans had accrued $54 trillion in Social Security benefits. Social Security’s unfunded obligation as of 2025 was $26 trillion. So, roughly, this means cutting Americans’ “earned benefits” in half. [Analyzing the 1977 reform that undid the notorious 1972 “double-indexing” of benefits, a group of economists], using SSA earnings data, found that, for every dollar of lost benefits, the affected Americans increased their earnings by 61 cents. Moreover, these additional earnings would be taxed by Social Security, further strengthening the program’s finances. In effect, this makes cutting benefits a “cheaper” way to fix Social Security than raising taxes, because people respond in ways that also increase tax revenues.

Takeaways by Macro Roundup^® AI

Keeping Social Security permanently solvent under the "fairness" model of paying accrued benefits in full would require an immediate and permanent payroll tax increase from 12.4% to 17.6%, which would decrease labor supply and reduce economic growth.
Americans had accrued $54 trillion in Social Security benefits as of 2025 against an unfunded obligation of $26 trillion, so closing the gap solely by cutting already-earned benefits would mean roughly halving those benefits.
Economists analyzing the 1977 reform that undid the 1972 "double-indexing" of benefits found, using SSA earnings data, that affected Americans raised their earnings by 61 cents per dollar of lost benefits, earnings that Social Security would tax.

The World’s Most Surprising Capitalist Makeover Is Under Way in Sweden

Tom Fairless Wall Street Journal

Date Posted:: May 12, 2026
Is Database:: Database

Swedish public social spending is now 23.7% of GDP, just 1pp above that of the US and well under France’s 31.6%. Market-based reforms in the 1990s brought overall government spending down from 69.4% to 49.3% in 2024.

For decades, Sweden was shorthand for the brand of high-tax, high-spend government that managed people’s lives from cradle to grave through state-run hospitals, schools and care homes. No longer. With little fanfare, this Nordic country of 11 million has embraced capitalism. Today, nearly half of primary healthcare clinics are privately owned, many by private-equity firms. One in three public high schools is privately run, up from 20% in 2011. School operators are listed on the stock exchange. The capitalist makeover has allowed Sweden to do what few industrialized countries have managed in recent years: shrink the size of the state. That has enabled the government to sharply lower taxes and, economists say, sparked a surge in entrepreneurship and economic growth. Its total public social spending bill—which includes healthcare, education and all welfare payments—has fallen to 24% of gross domestic product, similar to the U.S. and well below the over 30% for nations like France and Italy. Sweden’s economy is expected to grow by around 2% a year through 2030, roughly the same pace as the U.S. and double the growth rates of France and Germany, according to an April forecast by the International Monetary Fund.

Takeaways by Macro Roundup^® AI

Sweden's total public social spending, covering healthcare, education and welfare payments, has fallen to 24% of GDP, similar to the U.S. and well below the over 30% of nations like France and Italy.
Nearly half of Sweden's primary healthcare clinics are privately owned, many by private-equity firms, and one in three public high schools is privately run, up from 20% in 2011, with school operators listed on the stock exchange.
An April forecast by the International Monetary Fund projects Sweden's economy will grow around 2% a year through 2030, roughly matching the U.S. and double the growth rates of France and Germany.

How Policy and Demographics Are Reshaping SNAP: From Families with Children to Older Adults

Angela Rachidi American Enterprise Institute

Date Posted:: May 1, 2026
Is Database:: Database

About 40mm Americans, 12% of the population, receive SNAP benefits, up from 6% in 2000. In 2023, only 34% of these households included children, down from 49% in 2010, while 36% contained an elderly person, up from 16% in FY2010.

Comparing FY2000 with FY2025, the share of the population receiving SNAP doubled from 6% to 12%, while real SNAP costs per capita increased by 179%—from roughly $100 per year to $279 (in 2024 dollars). Despite this growth, per capita participation and costs in FY2025 remained below their pre-pandemic peak in 2013, which coincided with the aftermath of the Great Recession and changes in eligibility and other policies stemming from the 2008 Farm Bill. SNAP is countercyclical, meaning that all else equal, the number of people receiving SNAP should rise during recessions because of increased unemployment and decline as the economy recovers, [though] overall SNAP participation has grown faster than changes in the unemployment rate alone would predict. Over the long run, and especially since FY2020 (due to the Thrifty Food Plan’s increase in the maximum SNAP benefit), costs per capita have not returned to prerecession levels after a period of high unemployment. In FY2023, the share of SNAP households containing an elderly person (36%) exceeded the share containing a child (34%) for the first time. This was a sharp departure from the early 2000s, when more than half of SNAP households contained a child and less than 20% included an elderly person (Figure 2).

Takeaways by Macro Roundup^® AI

The share of the U.S. population receiving SNAP doubled from 6% in FY2000 to 12% in FY2025, while real SNAP costs per capita rose 179%, from roughly $100 to $279 per year in 2024 dollars.
In FY2023, the share of SNAP households containing an elderly person reached 36%, exceeding the 34% containing a child for the first time, against the early 2000s when over half contained a child and under 20% included an elderly person.

Washington’s Growing Portfolio: Tracking U.S. Government Investments

Jonathan Hillman Council On Foreign Relations

Date Posted:: April 23, 2026
Is Database:: Database

Since January 2025, the USG has taken equity stakes totaling $20.9B in 16 American businesses. $8.6B, ~41% of the total, was invested in critical mineral miners and processors, while $8.9B, ~43% of the total, funded the government’s 10% stake in Intel.

Since January 2025, the U.S. government has invested $20.9 billion across sixteen deals involving direct ownership, broadening a toolkit that has traditionally focused on grants, loans, and tax incentives. The Department of Commerce has participated in six such deals, including taking a 10% stake in Intel. The Development Finance Corporation, the United States’ development bank, has executed three equity transactions in critical minerals, healthcare, and infrastructure. The Department of Defense leads the way with seven such deals. The U.S. government is also working with a range of partners and has mobilized an additional $4.75 billion in investment. Private co-investors include J.P. Morgan, Goldman Sachs, and others.

Takeaways by Macro Roundup^® AI

Since January 2025, the U.S. government has invested $20.9 billion across sixteen deals involving direct ownership, broadening a toolkit traditionally focused on grants, loans, and tax incentives.
The Department of Defense leads with seven direct-ownership deals, followed by the Department of Commerce with six, including a 10% stake in Intel, while the Development Finance Corporation has executed three equity transactions in critical minerals, healthcare, and infrastructure.
The U.S. government has mobilized an additional $4.75 billion in investment alongside private co-investors including J.P. Morgan and Goldman Sachs.

How Federal Spending is Distributed by Age

Kent Smetters University of Pennsylvania

Date Posted:: April 2, 2026
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In 2025, of the 62.5% of Federal spending that is age-assignable on a per-capita basis, US retirees aged 65+ were given $43,700, working-age adults 26–64 got $7,300, and children and young adults got $4,300.

We trace spending items within 52 general spending categories, totalling $7T for the 2025 Fiscal Year. We are able to classify a total of $4.4T across three broad age categories and assign the remaining $2.6T to an all-ages residual. Retirees (adults age 65 and older) receive $2.7T, equal to 38.6% of total federal outlays and 61.9% of age-assignable spending. Working-age adults (ages 26-64) receive $1.2T (27.9% of age-assignable), and children and young adults (under age 26) receive $449B (10.3%). The dominance of the retiree category reflects two programs above all others: Social Security and Medicare. Social Security directs $1.3T to retirees, and Medicare sends $835B. Together, they account for 80% of all age-assignable spending on older adults. But the retiree total extends beyond these two entitlements. Federal employee retirement benefits ($169B), housing assistance for older households, Medicaid long-term-care spending, and VA medical care all contribute, making the federal budget more retiree-focused than a Social Security–only lens would suggest.

Takeaways by Macro Roundup^® AI

Retirees aged 65 and older receive $2.7 trillion of federal spending in fiscal 2025, equal to 38.6% of total outlays and 61.9% of age-assignable spending, versus $1.2 trillion for working-age adults aged 26–64.
Children and young adults under age 26 receive $449 billion, or 10.3% of age-assignable federal spending, out of $4.4 trillion classified by age within a $7 trillion budget, with $2.6 trillion assigned to an all-ages residual.
Social Security directs $1.3 trillion and Medicare $835 billion to retirees, together 80% of age-assignable spending on older adults, with federal employee retirement benefits ($169 billion), housing assistance, Medicaid long-term care, and VA medical care contributing further.

Has the United States Bent the Health Care Cost Curve?

David Cutler and Lev Klarnet Brookings Papers On Economic Activity

Date Posted:: March 30, 2026
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In 2024, medical spending as a share of GDP was just above its 2010 level and 15% ($977B) below its 2010 forecast; 21% of the gap was due to technology, 24% to price reductions, and 11–27% to reforms such as prior authorization and higher deductibles.

Five factors are important in the slowdown in spending [Figure 16]. The first is technology-associated changes in health and site of care. These correspond to the subsequent innovations in our model. Together, technologies along these lines account for 21% of the overall cost slowdown and double that in Medicare. Second, long-run supply is more elastic than short-run supply, which lowers spending over time. This is particularly apparent in the impact of patent expiration for pharmaceuticals and in relative declines in imaging reimbursement. We estimate that greater long-run supply explains 6% of the spending slowdown. Third, a variety of market changes contribute to reduced and more elastic demand, including increased cost sharing paid by consumers, physicians not paid as much for using technologies, and insurers imposing restrictions on technology use - a rough guess is that these account for 11 to 27% of the spending slowdown. Fourth, the population is healthier in ways that reduce spending. This includes fewer hospitalizations for smoking-related conditions and reduced need for formal home health care. The birth rate has fallen as well, which reduces the need for care. We estimate improved population health explains 7% of the spending slowdown. A major component is slower price growth. Net of upcoding, we estimate lower price growth explains 24% of the spending slowdown.

Takeaways by Macro Roundup^® AI

Technology-associated changes in health and site of care account for 21% of the overall U.S. health care cost slowdown and double that share in Medicare, according to the authors' estimates.
The authors estimate that slower price growth, net of upcoding, explains 24% of the health care spending slowdown, while market changes reducing demand — higher consumer cost sharing, lower physician payment for technology use, and insurer restrictions — account for a rough 11–27%.
Improved population health explains an estimated 7% of the spending slowdown, through fewer smoking-related hospitalizations, reduced need for formal home health care, and a lower birth rate, while greater long-run supply elasticity explains 6%.

Early termination of pandemic-related UI benefits in 18 states in June 2021 led to a 14pp increase in unemployed workers getting a job, but also increased financial stress. @GlennHubbard

Does ending expanded unemployment benefits early raise employment transitions?

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Biggs argues that “fair” approaches to restoring Social Security solvency – those that do not cut already accrued benefits – are less effective than “unfair” ones that do, because the latter incentivize increased work effort, raising growth and revenue.

Does closing Social Security's gap with higher payroll taxes hurt growth?

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Swedish public social spending is now 23.7% of GDP, just 1pp above that of the US and well under France’s 31.6%. Market-based reforms in the 1990s brought overall government spending down from 69.4% to 49.3% in 2024.

How has Sweden shrunk its state by privatizing public services?

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About 40mm Americans, 12% of the population, receive SNAP benefits, up from 6% in 2000. In 2023, only 34% of these households included children, down from 49% in 2010, while 36% contained an elderly person, up from 16% in FY2010.

How have food stamp enrollment, costs, and recipient households changed?

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Since January 2025, the USG has taken equity stakes totaling $20.9B in 16 American businesses. $8.6B, ~41% of the total, was invested in critical mineral miners and processors, while $8.9B, ~43% of the total, funded the government’s 10% stake in Intel.

Is the U.S. government taking direct equity stakes in companies?

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In 2025, of the 62.5% of Federal spending that is age-assignable on a per-capita basis, US retirees aged 65+ were given $43,700, working-age adults 26–64 got $7,300, and children and young adults got $4,300.

How is federal spending distributed across age groups?

Takeaways by Macro Roundup® AI

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In 2024, medical spending as a share of GDP was just above its 2010 level and 15% ($977B) below its 2010 forecast; 21% of the gap was due to technology, 24% to price reductions, and 11–27% to reforms such as prior authorization and higher deductibles.

What explains the slowdown in US health care spending?

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