The safety net and job loss: How much insurance do public programs provide?

Abstract

We comprehensively evaluate the role of the U.S. safety net in replacing displaced workers’ lost income and health insurance using the 1996–2013 Survey of Income and Program Participation. Cash and near-cash programs replace 32% of lost income on average over the two years following job loss and reduce the likelihood of experiencing poverty by 18 percentage points. 97% of transfer benefits paid in these two years come from Unemployment Insurance. Two years after job loss, the replacement rate is 28%, but this is largely driven by UI benefit extensions unique to the Great Recession. Public health insurance makes up for 17% of the loss in private insurance, but, even two years later, rates of uninsurance are higher than pre-job loss. Looking at heterogeneous effects, in general, the safety net is progressive, though we uncover important gaps in benefits for some disadvantaged groups.