In this paper, I consider the effect of changing the level of unemployment
insurance (UI) benefits on workers who do not receive UI. I hypothesize that
a spillover effect between insured and uninsured workers exists so that an
increase in the UI benefits, which leads to longer durations of unemployment
for insured workers, will lead to a reduction in the duration of unemployment
for the uninsured. This prediction is tested using data from several March
Current Population Surveys and the National Longitudinal Survey of Youth. In
both samples I find that an increase in UI benefits leads to a reduction in
the duration of unemployment for uninsured workers. Furthermore, using
several years of state level data, I show that the estimated effect on
unemployment for the entire labor force is roughly zero when I allow for the
spillover effect.