Premature termination of unemployment benefits increased COVID-19 transmission and deaths in the USA.

Expanded unemployment insurance (UI) during the COVID-19 pandemic protected livelihoods, but it may also have saved lives by incentivizing physical-distancing behaviour. We estimate UI effects on weekly COVID-19 outcomes using regression-adjusted difference-in-differences and exploiting cross-state variation in the USA during summer 2021. We find that all outcomes more than tripled in states discontinuing pandemic UI programmes: weekly cases rose 0.18 percentage points (95% confidence interval, 0.07-0.28), hospitalizations rose by 0.18 per 1,000 (0.09-0.27), COVID-19 deaths rose by 2.72 per 100,000 (1.23-4.21) and excess deaths rose by 4.60 per 100,000 (2.82-6.39). The results show no pre-trends, pass 'placebo' tests and are robust to alternative sets of control variables, inverse-probability weighting, and heterogeneity in policies, behaviours and political leanings. Supporting a causal interpretation, UI claims fell and re-employment rose in discontinuer states, COVID-19 worsened where re-employment rose more, the COVID-19 death share of under-65-year-olds grew and illness-related lost work time increased. Additional hospitalization costs exceeded UI outlays. COVID-19 deaths rose by 25,100 (11,400-38,900) and excess deaths by 42,600 (26,100-59,100): deaths without benefits.