Racial inequality in the U.S. unemployment insurance

About this event

In the U.S., the rules commanding the rights to unemployment insurance (UI) are less generous in states with larger Black populations, which means that Black claimants systematically receive less UI than White claimants with the same work history. Quantifying this racial inequality is challenging, as data are collected in each state separately. In this paper, we exploit random audits on UI claims conducted in all states, as part of the federal Benefit Accuracy Measurement program. We combine data on paid and denied claims, to build a novel representative dataset of new claimants. We document that relative to White claimants, Black claimants receive $84.9 (33%) lower weekly benefits. After controlling for claimants' work history, we still find an adjusted racial gap of $10.6 (4%). This comes from Black claimants being 2.4 ppt less likely to be found eligible for UI, and from them receiving $7.6 lower weekly benefits when eligible. We show that these adjusted gaps are entirely driven by the differences in state rules. Therefore, adjusted racial gaps in UI could be eliminated by harmonizing state UI rules.