Spending and Job-Finding Impacts of Expanded Unemployment Benefits: Evidence from Administrative Micro Data

We show that the largest increase in unemployment benefits in U.S. history had large spending impacts and small job-finding impacts.This finding has three implications.First, increased benefits were important for explaining aggregate spending dynamics-but not employment dynamics-during the pandemic.Second, benefit expansions allow us to study the MPC of normally low-liquidity households in a high-liquidity state.These households still have high MPCs.This suggests a role for persistent behavioral characteristics, rather than just current liquidity, in driving spending behavior.Third, the mechanisms driving our results imply that temporary benefit supplements are a promising countercyclical tool.