A Quantitative Analysis of CARES Act Unemployment Insurance

We quantitatively evaluate the impacts of the CARES Act UI policy on unemployment in2020. More generous UI policies lead to higher unemployment, but save lives by reducinginfections at the workplace. We find that the CARES UI policy raises average unemploymentby 1.61 percentage points over April to December 2020 and reduces cumulativedeaths by 2.09 percent, with the policy’s interaction with shutdown and COVID infectionrisk playing a quantitatively important role. We also find that CARES UI’s impact on unemploymentis heterogeneous: it is larger in sectors where jobs cannot be performed remotely,and it is hump-shaped over income. Decomposing the total effect into contributions by thethree CARES UI components, we find that the interaction among the components accountsfor one-third of the total policy effect.