October 16, 2025

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Working Paper 2025-14

Abstract: The United States experienced an unprecedented increase in unemployment insurance (UI) claims beginning in March 2020. State UI-benefit systems were strained beyond their administrative capacity to process the dual challenge of an unprecedented increase in claims and changes to UI benefits. In states that used an antiquated programming language, COBOL, to process claims, potential claimants experienced a larger increase in administrative difficulties, resulting in longer delays in benefit disbursement. States that used an antiquated UI-benefit system experienced a 2.8 percentage point decline in total credit and debit card consumption relative to card consumption in states with more modern UI benefit systems. Furthermore, states that used these antiquated systems experienced at least a 2.1 percentage point increase in the share of claims that were delayed by more than 70 days.

JEL classification: E24, J65, E21, I38

Key words: unemployment insurance, administrative burdens, automatic stabilizers

https://doi.org/10.29338/wp2025-14

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Michael A. Navarrete is with the Research Department of the Federal Reserve Bank of Atlanta. He is deeply indebted to Judy Hellerstein, John Haltiwanger, Ethan Kaplan, Katharine Abraham, Tara Watson, Louise Sheiner, and Brendan Price for their invaluable guidance and support. The author thanks John Shea, Melissa Kearney, Rachel Nesbit, Annelies Goger, Jim Poterba, and seminar participants at the University of Maryland, the Upjohn Institute, the Brookings Institution, Williams College, and the Federal Reserve Bank of Boston for their helpful comments and discussions. Eshna Ghosh, Yonathan Melamed, Isabel Roberts, and Emily Zhou provided excellent research assistance. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the Federal Reserve System, the Board of Governors, or its staff. All errors are the author's.

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