We supplement this quantitative assessment of reservation benefits with direct empirical analysis of labor force transitions using matched Current Population Survey (CPS) data, linked to annual earning records from the CPS income supplement to form UI replacement rates. workers suggests that only a small fraction would turn down an offer to return to work at their previous wage under the CARES Act expanded UI payments. Calculating the reservation benefit and comparing it to imputed benefit payments for a wide range of U.S. We derive a reservation level of benefit payments at which an individual is indifferent between accepting and refusing a job offer at their prior wage. To assess the impact of the UI supplement, we analyze the job acceptance decision in a dynamic framework in which job seekers weigh the value of a job against remaining unemployed, accounting for the perceived state of the labor market and expected weeks of UI benefits. This unprecedented increase in UI generosity caused weekly benefit payments to exceed prior earnings for most recipients, raising concern that many would be unwilling to accept job offers, slowing the labor market recovery. CARESĪct granted an extra $600 per week in unemployment insurance (UI) benefit payments from late March through July 2020. To provide economic relief following the onset of the COVID-19 pandemic, the U.S.
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