Unemployment Insurance and Employment: Evidence from the Lost Wages Assistance Program

In August 2020, the US government introduced the Lost Wages Assistance Program, the purpose was to provide relief to the unemployed workers. Under the program, $300 additional payments were provided in addition to regular UI benefits. Using the Household Pulse Survey, this paper attempts to study the employment effects of the program. I find that a 1% increase in the replacement rate due to LWA was associated with a 4% decrease in the probability of working. Using timing variation, I present the event study results through the Callaway and Sant'anna estimator and find similar negative employment effects. The results are robust to various specifications and statistically significant among the sub-groups as well. JEL Codes: J21, J22, J65