Unemployment Insurance and Subsequent Job Duration: Job Matching vs Unobserved Heterogeneity

Arbeitspapier

The relationship between unemployment benefit duration, unemployment duration and subsequent job duration is investigated using a multi-state duration model with state specific unobserved heterogeneity. I allow maximum benefit duration to be correlated with unemployment duration as well as accepted job duration. I examine two potential explanations for the relationship between unemployment and job spell durations; UI benefits increase job matching quality vs unobserved heterogeneity. I find that the escape rate out of unemployment seems to raise significantly within 5 weeks of benefit termination and new jobs accepted within this 5 week period seem to have a higher dissolution rate. At the same time, unobserved heterogeneity is also found to explain the correlation between unemployment and job duration. Various simulations indicate that increasing the maximum benefit duration by one week will raise expected unemployment duration by 1 to 1.5 days and expected job duration by 0.5 to 0.9 day.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 116

Classification and Topics

• Classification: Wirtschaft ; Unemployment Insurance; Severance Pay; Plant Closings ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: Unemployment insurance ; unemployment duration ; job duration ; job matching ; Arbeitslosenversicherung ; Arbeitslosigkeit ; Arbeitsuche ; Betriebszugehörigkeit ; Arbeitsmobilität ; Dauer ; Schätzung ; Kanada

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Belzil, Christian
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/20957
• Last update: 10.03.2025, 11:43 AM CET