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How Does the Unemployment Insurance System Shape the Time Profile of Jobless Duration?

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Author Info
Addison, John T. () (University of South Carolina and IZA Bonn)
Portugal, Pedro (Banco de Portugal and Universidade Nova de Lisboa)

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Abstract

This paper examines the effects of unemployment insurance on escape rates from unemployment using data from the 1998 Displaced Worker Survey. Transitions from unemployment to employment are modeled using a flexible representation of the baseline hazard function and allowing for discrete changes through time in the effects of unemployment insurance benefits, as well as those of the other covariates. The impact of unemployment insurance is also modeled using a time-varying benefits measure, namely, time to exhaustion of benefits. Potential biases stemming from reverse causation and unobserved individual heterogeneity are accommodated. Both approaches render transparent the major disincentive effects of access to benefits on re-employment rates while also providing evidence of time-varying effects of other regressors.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 978.

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Length: 27 pages
Date of creation: Jan 2004
Date of revision:
Handle: RePEc:iza:izadps:dp978

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Related research
Keywords: unemployment benefits; unemployment duration; time-varying coefficients/regressors;

Other versions of this item:

Find related papers by JEL classification:
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings

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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. James M. Poterba & Lawrence H. Summers, 1984. "Survey Response Variation in the Current Population Survey," NBER Working Papers 1109, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. McCall, Brian P, 1994. "Testing the Proportional Hazards Assumption in the Presence of Unmeasured Heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(3), pages 321-34, July-Sept. [Downloadable!] (restricted)
  3. Dale T. Mortensen, 1977. "Unemployment insurance and job search decisions," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 30(4), pages 505-517, July.
  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. McCall, B.P., 1993. "Unemployment Insurance Rules, Joblessness, and Part-Time Work," Papers 93-07, Minnesota - Industrial Relations Center.
    Other versions:
  6. McCall, Brian P, 1997. "The Determinants of Full-Time versus Part-Time Reemployment Following Job Displacement," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 714-34, October. [Downloadable!] (restricted)
  7. Bruce K. Fallick, 1989. "Unemployment Insurance and the Rate of Re-Employment of Displaced Workers," UCLA Economics Working Papers 550, UCLA Department of Economics. [Downloadable!]
  8. Kletzer, Lori G, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-36, Winter. [Downloadable!] (restricted)
  9. Narendranathan, W & Stewart, Mark B, 1993. "How Does the Benefit Effect Vary as Unemployment Spells Lengthen?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 8(4), pages 361-81, Oct.-Dec.. [Downloadable!] (restricted)
  10. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February. [Downloadable!] (restricted)
    Other versions:
  11. Pedro Portugal & John T. Addison, 1990. "Problems of sample construction in studies of the effects of unemployment insurance on unemployment duration," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 43(4), pages 463-477, April.
  12. Fallick, Bruce Chelimsky, 1991. "Unemployment Insurance and the Rate of Re-employment of Displaced Workers," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 228-35, May. [Downloadable!] (restricted)
  13. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-66, September. [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. Lalive, Rafael & van Ours, Jan C. & Zweimueller, Josef, 2004. "How Changes in Financial Incentives Affect the Duration of Unemployment," IZA Discussion Papers 1363, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Ott-Siim Toomet, 2005. "Does an Increase in Unemployment Income Lead to Longer Unemployment Spells? Evidence Using Danish Unemployment Assistance Data," Bank of Estonia Working Papers 2005-09, Bank of Estonia, revised 10 Oct 2005. [Downloadable!]
  3. Lalive, Rafael & Ours, Jan C. van & Zweimueller, Josef, 2006. "How changes in potential benefit duration affect equilibrium unemployment," Discussion Paper 94, Tilburg University, Center for Economic Research. [Downloadable!]
Statistics
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This page was last updated on 2009-11-23.


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