Do Job Seekers Understand the UI Benefit System (and Does It Matter)?

Abstract

We study how job seekers’ understanding of the unemployment insurance system affects their labor market performance. Combining data from a large-scale field experiment, detailed administrative records, and a survey of unemployed job seekers, we document three main results. First, job seekers exhibit pronounced knowledge gaps about the prevailing benefit rules and their personal entitlements. Second, we show that a low-cost information strategy using a personalized online tool increases job seekers’ understanding of these aspects. Finally, we document heterogeneous labor market effects of the intervention based on its timing during the benefit spell and individuals’ personal risk of long-term unemployment.