The macroeconomic effects of changes in the level of UI benefits: the role of reform features and context

The aim of the project is to study whether the context and the features of UI reforms have quantitatively significant implication for the macroeconomic impact of changes in unemployment insurance (UI) benefits on wages and other labor market outcomes like unemployment (both from a theoretical and an empirical standpoint). The project is motivated by a recent paper published in the Quaterly Journal of Economics by Simon Jäger and his co-authors which finds that wages are unresponsive to changes in UI benefits. While ignoring many contextual features of the reforms, the authors argue that their finding contradicts the predictions of standard wage determination models. However, the predictions of standard models are different if the assumptions better mirror the actual context as well as the features of the UI reforms under study. It is possible that the context and the features of the reforms are the main source of the empirical zero effect of UI reforms on wages.