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Modelling the Time on Unemployment Insurance Benefits

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  • Bijwaard, Govert

    (NIDI - Netherlands Interdisciplinary Demographic Institute)

Abstract

A duration model based on the time on Unemployment Insurance (UI) benefits instead of a model based on the time till re-employment is more relevant from a cost-benefit perspective. The contribution of this paper is to extend the standard (mixed) Proportional Hazard model to account for an upper bound on the duration. We use a modified mover-stayer model to this end and discuss the interpretation of the parameters. In an empirical application we compare the method with the standard analysis of unemployment duration. We also derive the expected UI-benefit costs implied by the model for some typical unemployed individuals.

Suggested Citation

  • Bijwaard, Govert, 2007. "Modelling the Time on Unemployment Insurance Benefits," IZA Discussion Papers 2936, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2936
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    References listed on IDEAS

    as
    1. Woodbury, Stephen A & Spiegelman, Robert G, 1987. "Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois," American Economic Review, American Economic Association, vol. 77(4), pages 513-530, September.
    2. Schmidt, Peter & Witte, Ann Dryden, 1989. "Predicting criminal recidivism using 'split population' survival time models," Journal of Econometrics, Elsevier, vol. 40(1), pages 141-159, January.
    3. Bijwaard, Govert & Veenman, Justus, 2007. "Unequal Chances on the Transitional Labor Market: The Case of the Netherlands," IZA Discussion Papers 2908, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    UI-benefits; maximum duration; mixed proportional hazard; mover-stayer model;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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