A new national study provides the best evidence to date that generous unemployment insurance benefits during the COVID-19 pandemic helped reduce reliance on high-cost credit use.

Researchers found that lower-income residents of states with more generous benefits were significantly less likely than those living in less-generous states to take out new credit cards, personal finance loans and payday loans or other alternative financial service offerings.

The study, published recently in the journal Nature Human Behaviour, was led by Rachel Dwyer, professor of sociology at The Ohio State University, and Stephanie Moulton, professor in Ohio State's John Glenn College of Public Affairs.

The findings provide evidence that programs like unemployment insurance can play a powerful role in keeping low-income Americans from falling further behind financially, said Moulton.

"Providing more generous unemployment benefits helps people avoid these really expensive types of debt that are costly not only for individuals, but eventually for society," Moulton said.

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