Unemployment Benefits and Labour Market Transitions in Britain
AbstractRecent evidence suggests that unemployment benefit recipients search more extensively than non-recipients. It is conceivable that benefit claimants, looking for work in a more formal search environment, enjoy an informational advantage relative to non-claimants. This paper examines how such an effect could influence the probability of leaving unemployment, utilising data drawn from a matched sub-sample of the 1983 and 1984 Labour Force Surveys. Studies which neglect the claimant/non-claimant dichotomy may bias the true impact of the benefit system on transitions, since they also neglect this informational asymmetry. Utilising a general Markovian framework, multinomial logistic regressions of individual annual transition probabilities from unemployment into employment and inactivity are estimated. Benefit receipt has a small positive influence on the likelihood of employment entry amongst those most at risk from labour force exit- women and the long-term unemployed. The main benefit impact however, is to maintain a higher effective labour supply.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0073.
Date of creation: Apr 1992
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- Fredriksson, Peter & Holmlund, Bertil, 1998.
"Optimal Unemployment Insurance in Search Equilibrium,"
Working Paper Series
1998:2, Uppsala University, Department of Economics.
- Fredriksson, Peter & Holmlund, Bertil, 2001. "Optimal Unemployment Insurance in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 370-99, April.
- Fredriksson, P. & Holmlund, B., 1998. "Optimal Unemployment Insurance in Search Equilibrium," Papers 1998-2, Uppsala - Working Paper Series.
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