Abstract: A large body of research has highlighted the substantial and persistent earnings losses suffered by displaced workers, referred to as the “scarring effect.” However, policy interventions aimed at alleviating these losses remain largely unexplored. This paper bridges this gap by evaluating the long-term effects of unemployment insurance (UI) on post-displacement outcomes. Leveraging cross-state variations in UI policy over time, I find that a 13-week extension in maximum UI duration reduces long-term earnings losses by 10-15% over a 10-year period. This reduction is primarily driven by an increase in hours worked, with minimal impact on wage rates. Conversely, UI replacement rates have a small and largely insignificant effect on earnings, wage rates, and labor supply. These patterns are consistent across different educational levels, racial backgrounds, and economic conditions at the time of displacement. To explore the mechanisms, I show that the non-pecuniary aspects of a job improve with longer maximum duration, and explain a substantial portion of the effect of maximum duration on labor supply. A search model incorporating the intensive margin of labor supply and non-pecuniary benefits suggests these patterns are driven by shifts in reservation utility. The model indicates that either there is a low correlation between non-pecuniary benefits and wage rate offers along with a small variance in wage rate offers in the market, or that workers prefer non-pecuniary benefits over wage rates, or a combination of these two factors.

Abstract: This study investigates the impact of maternal job displacement on children's educational attainment in single-mother households. The previous literature, which often relies on propensity score matching to construct a control group for households experiencing displacement, consistently reports negative effects of maternal displacement on children's outcomes. However, this study finds that, after accounting for pre-displacement partnership dynamics, partner income, and the duration of single motherhood, the effects of displacement on children's educational attainment are generally small, and in some cases, even positive. These positive effects are primarily driven by children whose mothers were displaced during middle childhood, while those experiencing displacement in adolescence exhibit negative impacts. To explore these patterns, I examine changes in household resources following displacement. The findings show that initial earnings losses are largely mitigated by safety net programs, particularly unemployment insurance benefits. Additionally, displaced single mothers are more likely to find a partner with higher incomes in the years following displacement. As a result, although the household incomes of displaced mothers are initially lower than those of mothers who were not displaced, they eventually surpass them in the long-term. However, this trend is less pronounced for mothers displaced during their children's adolescence. This income trajectory helps explain the positive effects of displacement during middle childhood and the negative effects observed during adolescence. Further investigations into other potential channels, such as early academic performance, mental health, and self-reported health, do not provide additional explanations for the patterns of educational attainment.