Job Destruction, Unemployment, and Unemployment Insurance Benefits : Evidence from the Outbreak of COVID-19 across US Counties

This paper explores the potential externality of welfare payments under the Unemployment Insurance (UI) program during times of high job destruction rates and unemployment rates on the spread and mortality of COVID-19. Using data for all US counties over the year 2020 and applying a difference-in-difference identification strategy, we explore the potential effects of UI benefits on the spread of COVID-19. We find that each additional $1,000 increase in UI maximum benefit is associated with 0.03 fewer deaths and 3.9 fewer confirmed cases per 100,000 population. The results are quite robust across specifications and subsamples with larger effects observed among counties with a higher share of blacks and low educated individuals and among counties below-median of per capita income