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Estimating the Effect of Unemployment Insurance Compensation on the Labor Market Histories of Displaced Workers

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Author Info
Jurajda, Stepán () (CERGE-EI, CEPR, WDI and IZA, Bonn)

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Abstract

In this paper, U.S. data on labor market histories of displaced workers are used to quantify the effect of Unemployment Insurance Compensation (UIC) on both unemployment and employment durations. This results in the first available assessment of the effect that UIC has on the fraction of time spent employed. The estimation procedure simultaneously allows for unobserved heterogeneity, defective risks and sample selection into future spells, and uses alternative assumptions about agents’ knowledge of the UIC eligibility rules. Being entitled to UIC shortens workers’ employment durations. This negative effect on the fraction of time spent employed could be offset by suspending an extended benefits program in order to shorten unemployment durations.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 294.

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Length: 45 pages
Date of creation: May 2001
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Handle: RePEc:iza:izadps:dp294

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Related research
Keywords: Employment durations; unemployment insurance; unmeasured heterogeneity; defective risks; sample selection;

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Find related papers by JEL classification:
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Christofides, Louis N & McKenna, C J, 1996. "Unemployment Insurance and Job Duration in Canada," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 286-312, April. [Downloadable!] (restricted)
  2. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March. [Downloadable!] (restricted)
  3. David Card & Phillip B. Levine, 1992. "Unemployment Insurance Taxes and the Cyclical and Seasonal Properties of Unemployment," NBER Working Papers 4030, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July. [Downloadable!] (restricted)
    Other versions:
  5. Katz, Lawrence F & Meyer, Bruce D, 1990. "Unemployment Insurance, Recall Expectations, and Unemployment Outcomes," The Quarterly Journal of Economics, MIT Press, vol. 105(4), pages 973-1002, November. [Downloadable!] (restricted)
    Other versions:
  6. McCall, B.P., 1993. "Unemployment Insurance Rules, Joblessness, and Part-Time Work," Papers 93-07, Minnesota - Industrial Relations Center.
    Other versions:
  7. Baily, Martin Neil, 1977. "On the Theory of Layoffs and Unemployment," Econometrica, Econometric Society, vol. 45(5), pages 1043-63, July. [Downloadable!] (restricted)
  8. Peter Schmidt & Ann Dryden Witte, 1989. "Predicting Criminal Recidivism Using "Split Population" Survival Time Models," NBER Working Papers 2445, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Michael Baker & Samuel A. Rea, 1998. "Employment Spells And Unemployment Insurance Eligibility Requirements," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 80-94, February. [Downloadable!] (restricted)
    Other versions:
  10. Stepan Jurajda, 2003. "Unemployment Insurance and the Timing of Layoffs and Recalls," LABOUR, CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd, vol. 17(3), pages 383-389, 09. [Downloadable!] (restricted)
  11. Rogers, Cynthia L, 1998. "Expectations of Unemployment Insurance and Unemployment Duration," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 630-66, July. [Downloadable!] (restricted)
  12. Ham, John C & Rea, Samuel A, Jr, 1987. "Unemployment Insurance and Male Unemployment Duration in Canada," Journal of Labor Economics, University of Chicago Press, vol. 5(3), pages 325-53, July. [Downloadable!] (restricted)
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  13. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-60, December. [Downloadable!] (restricted)
  14. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-57, October. [Downloadable!] (restricted)
  15. Haltiwanger, John, 1984. "The Distinguishing Characteristics of Temporary and Permanent Layoffs," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 523-38, October. [Downloadable!] (restricted)
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  16. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January. [Downloadable!] (restricted)
  17. Heckman, James J & Walker, James R, 1990. "The Relationship between Wages and Income and the Timing and Spacing of Births: Evidence from Swedish Longitudinal Data," Econometrica, Econometric Society, vol. 58(6), pages 1411-41, November. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Konstantinos Tatsiramos, 2006. "Unemployment Insurance in Europe: Unemployment Duration and Subsequent Employment Stability," IZA Discussion Papers 2280, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Nigel Key & Michael J. Roberts & Erik O'Donoghue, 2006. "Risk and farm operator labour supply," Applied Economics, Taylor and Francis Journals, vol. 38(5), pages 573-586, March. [Downloadable!] (restricted)
  3. Petrongolo, Barbara, 2008. "The long-term effects of job search requirements: Evidence from the UK JSA reform," CEPR Discussion Papers 7067, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Rafael Lalive & Josef Zweimueller, 2002. "Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. van Ours, Jan C. & Vodopivec, Milan, 2006. "Duration of unemployment benefits and quality of post-unemployment jobs : evidence from a natural experiment," Policy Research Working Paper Series 4031, The World Bank. [Downloadable!]
  6. Stepan Jurajda & Daniel Münich, 2002. "Understanding Czech Long-Term Unemployment," William Davidson Institute Working Papers Series 498, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  7. Ours, Jan C. van & Vodopivec, Milan, 2006. "Shortening the potential duration of unemployment benefits does not affect the quality of post-unemployment jobs: evidence from a natural experiment," Discussion Paper 56, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  8. Barbara Petrongolo, 2007. "What Are the Long-Term Effects of UI? Evidence from the UK JSA Reform," CEP Discussion Papers dp0841, Centre for Economic Performance, LSE. [Downloadable!]
  9. Tatsiramos, Konstantinos, 2004. "The Effect of Unemployment Insurance on Unemployment Duration and the Subsequent Employment Stability," IZA Discussion Papers 1163, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Petrongolo, Barbara, 2008. "The Long-Term Effects of Job Search Requirements: Evidence from the UK JSA Reform," IZA Discussion Papers 3856, Institute for the Study of Labor (IZA). [Downloadable!]
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