Jeff Larrimore

Jacob Mortenson

David Splinter

October 2022

The views in this presentation reflect those of the authors and should not be attributed to the 

Federal Reserve Board, the Federal Reserve System or other members of the research staff. 

This paper embodies work undertaken for the staff of the Joint Committee on Taxation, but as 

members of both parties and both houses of Congress comprise the Joint Committee on 

Taxation, this work should not be construed to represent the position of any member of the 

Committee. 

Unemployment Insurance in 

Surveys and Administrative Data
Jeff Larrimore, Jacob Mortenson, and David Splinter 2

Why care about UI?

Major part of direct Covid fiscal relief

Stimulus Checks

$817 Billion

Unemployment benefits

$678 Billion

CTC

Expansion

$93 B

SNAP &

Food assistance

$71 Billion

Delayed

Student

Loans

$39 B.

Note: As of March 2022. Source: Center for a Responsible Federal Budget and the New York Times

Relief to individuals and families
Jeff Larrimore, Jacob Mortenson, and David Splinter 3

Our goals

• Do CPS estimates of UI match 

administrative records? (in 2020 ~half)

Severity of 

Underreporting

• How does correcting UI change poverty 

estimates? (In 2020 decrease ~2 p.p)

Effects on 

Poverty

• Does UI tax exclusion distribution differ Tax Implications from UI benefits? (Yes, less progressive)

• We provide public-use imputation data to 

correct UI amounts in the CPS

Data 

Contribution
Jeff Larrimore, Jacob Mortenson, and David Splinter 4

Data: IRS

• 5% sample of people in tax data (2000-2021)

• Tax data contains ~99% of US residents (Larrimore, 

Mortenson, and Splinter 2021)

• Restrict to ages 15+ (matching CPS)

• How UI appears in tax records

• IRS Form 1099-G: Produced by state governments. 

Shows amount of UI paid to each individual, including 

non-filers.

• IRS Form 1040: Self-reported UI receipt among filers

• We take the higher value from these forms
Jeff Larrimore, Jacob Mortenson, and David Splinter 5

Data: CPS

• Compare IRS results to the March CPS-ASEC

• Use Rothbaum and Bee (2021) corrected weights

• CPS questions (March 2021)

• At any time during 2020 did you (you/anyone in the household) receive 

any ... 

• State or Federal unemployment compensation?

• Supplemental Unemployment Benefits (SUB)?

• Union Unemployment or Strike Benefits?

If Received UI, ask amount:

• How much did (name/you) receive (weekly/every other week/ twice a 

month/monthly) in ...

• State or Federal unemployment compensation during 2020?

• Supplemental Unemployment Benefits during 2020?

• Union Unemployment or Strike Benefits during 2020?
Jeff Larrimore, Jacob Mortenson, and David Splinter 6

Data: Income groups

• Group individuals in both datasets by Modified Market 

Income

• INCLUDES income in both datasets:

• Market income (wages, salaries, self-employment, 

interest, dividends, rents, pensions)

• Alimony

• Social Security and Disability

• EXCLUDES UI
Jeff Larrimore, Jacob Mortenson, and David Splinter 7

CPS had 22 million fewer UI 

recipients than the IRS in 2020 ...

45.4

23.6

0

20

40

60

2000 2004 2008 2012 2016 2020

UI Recipients (millions)

IRS

CPS
Jeff Larrimore, Jacob Mortenson, and David Splinter 8

... and captured $350 Billion less in 

benefits

565

218

0

100

200

300

400

500

600

2000 2004 2008 2012 2016 2020

UI Benefits ($ billions)

IRS

CPS
Jeff Larrimore, Jacob Mortenson, and David Splinter 9

Underreporting occurs in all years, but 

matters more in 2020 due to larger amounts

0.3

0.4

0.5

0.6

0.7

0.8

2000 2004 2008 2012 2016 2020

Ratios of CPS to IRS benefits and recipients

Benefits Ratio

Recipients Ratio
Jeff Larrimore, Jacob Mortenson, and David Splinter 10

Among recipients, distribution of 

benefits similar in 2019, not 2020

0%

20%

40%

60%

80%

100%

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Share of UI recipients with benefits

below dollar amount

UI benefit amount for individual recipient

2019 IRS

2020

CPS

2019

CPS

2020 IRS
Jeff Larrimore, Jacob Mortenson, and David Splinter 11

CPS misses UI disproportionately 

among low-income populations in 2020

0

25

50

75

100

1 2 3 4 5 6 7 8 9 10

UI benefits (billions)

Modified market income decile

2020

IRS

CPS
Jeff Larrimore, Jacob Mortenson, and David Splinter 12

Impute corrected UI into CPS data

• Public-use UI imputation data based on IRS data available at 

davidsplinter.com

• Contains recipient count and mean/SD of UI benefits for 

each centile of modified market income

• Individuals in CPS with benefits: 

• Unchanged

• Individuals in CPS without benefits:

• Randomly impute recipients, prioritizing those with labor 

earnings, so recipient counts in each centile match IRS

• Impute benefits using a normal distribution so final centile 

mean matches IRS data and standard deviation of 

imputed benefits also matches IRS data
Jeff Larrimore, Jacob Mortenson, and David Splinter 13

Imputation assumptions

• After controlling for recent employment, receipt of unreported 

UI within percentile not correlated with household size

• Functionally has little effect – changing recipients shifts 

poverty rates about 0.1 p.p.

• Unreported UI uncorrelated with non-taxable transfers not 

observed in tax data

• Note: if using imputation to explore subgroups (race/age), 

must also assume underreported UI not correlated with 

group characteristics after controlling for income and recent 

employment
Jeff Larrimore, Jacob Mortenson, and David Splinter 14

After correcting for UI, poverty fell in 

2020 rather than increased

10.5

11.4 10.9

11.9

10.9

9.6

0

2

4

6

8

10

12

14

16

2019 2020

Poverty Rate

Original

UI Corrected w/ RB weights

Effect of 

correction

Rothbaum and Bee Weights
Jeff Larrimore, Jacob Mortenson, and David Splinter 15

UI tax expenditure

• Normally UI benefits are taxable

• The American Rescue Plan Act of 2021 excluded 

$10,200 of UI compensation per person from taxation 

for most people

• Distribution of these benefits will depend on both 

amount of UI and tax rates
Jeff Larrimore, Jacob Mortenson, and David Splinter 16

UI benefits concentrated among lowincome, tax expenditure is not

0%

5%

10%

15%

20%

1 2 3 4 5 6 7 8 9 10

Share of beneifts & tax expenditure

Modified market income decile

UI exclusion

tax expenditure UI benefits
Jeff Larrimore, Jacob Mortenson, and David Splinter 17

2021 update: UI benefits still an issue

• Enhanced UI benefits continued into 2021

• Was this still an issue for CPS data and poverty? Yes 

18

217

90 30

565

310

28

537

339

0

100

200

300

400

500

600

2019 2020 2021

Billions of dollars

Total Unemployment Insurance Benefits (Billions)

CPS

IRS

Sources: Author's calculations using CPS-ASEC; Larrimore, Mortenson, and Splinter (2022) using IRS data, and National

Income and Product Accounts Table 2.1.

NIPA
Jeff Larrimore, Jacob Mortenson, and David Splinter 18

2021 update: poverty rates continue 

to be overstated due to missing UI

10.5

11.4 11.6 11.7

9.1

7.8

10.4

9.5 10.1

11.6

7.3

6.6

0.0

4.0

8.0

12.0

16.0

2019 2020 2021 2019 2020 2021

Poverty Rate

Official and Supplemental Poverty Rates

(all with original CPS weights)

Original (dashed)

Corrected (solid)

Official Poverty Measure Supplemental Poverty Measure

Source: Author’s calculations using CPS-ASEC data and UI data from Larrimore, Mortenson, and Splinter (2022).

Note: Original values are from the public use CPS-ASEC data, which differ slightly from results in Census Bureau (2022). Figure uses original CPS-ASEC

Source: Larrimore (2022)
Jeff Larrimore, Jacob Mortenson, and David Splinter 19

Conclusions

• Unemployment Insurance is severely underreported in 

the CPS-ASEC

• During the pandemic, this had a material effect on 

poverty rates

• Using our correction for this underreporting, poverty 

(using the OPM) fell in 2020 and was 2 percentage 

points below that originally reported

• Underreporting of UI and overreporting of poverty 

continued into 2021

• Researchers using public-use CPS can use our 

summary data and code to correct for UI underreporting