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Six Ways to Leave Unemployment

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  • Pedro Portugal
  • John T. Addison

Abstract

This paper uses a unique Portuguese data set to examine the effect of unemployment benefit receipt and maximum duration of benefits on escape rates from unemployment. The focus is on the time profile of transitions out of unemployment. The novel aspect of the study resides in its identification of six destination states, namely, open-ended employment, fixed-term contracts, part-time work, government-provided jobs, self employment, and labor force withdrawal. Strong evidence of disincentive effects of the unemployment benefit system is reported. This result obtains both in general and for the various destination states, among which some marked behavioral differences are detected.

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File URL: http://www.bportugal.pt/en-US/BdP%20Publications%20Research/WP200311.pdf
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Bibliographic Info

Paper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w200311.

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Date of creation: 2003
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Handle: RePEc:ptu:wpaper:w200311

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  1. Bonnal, Liliane & Fougere, Denis & Serandon, Anne, 1997. "Evaluating the Impact of French Employment Policies on Individual Labour Market Histories," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(4), pages 683-713, October.
  2. Olympia Bover & Pilar García-Perea & Pedro Portugal, 2000. "Labour market outliers: Lessons from Portugal and Spain," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 15(31), pages 379-428, October.
  3. Christopher J. Flinn & James J. Heckman, 1982. "Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?," NBER Working Papers 0979, National Bureau of Economic Research, Inc.
  4. 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.
  5. Pedro Portugal & Olivier Blanchard, 2001. "What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets," American Economic Review, American Economic Association, vol. 91(1), pages 187-207, March.
  6. José Varejão & Pedro Portugal, 2003. "Why Do Firms Use Fixed-Term Contracts?," CEF.UP Working Papers 0310, Universidade do Porto, Faculdade de Economia do Porto.
  7. José Varejão & Pedro Portugal, 2004. "Matching Workers to Jobs in the Fast Lane: the Operation of Fixed-term Contracts," Working Papers, Banco de Portugal, Economics and Research Department w200410, Banco de Portugal, Economics and Research Department.
  8. McCall, B.P., 1993. "Unemployment Insurance Rules, Joblessness, and Part-Time Work," Papers, Minnesota - Industrial Relations Center 93-07, Minnesota - Industrial Relations Center.
  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., John Wiley & Sons, Ltd., vol. 8(4), pages 361-81, Oct.-Dec..
  10. Belzil, Christian, 1995. "Unemployment Insurance and Unemployment over Time: An Analysis with Event History Data," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 113-26, February.
  11. Narendranathan, W. & Stewart, M.B., 1989. "Modelling The Probability Of Leaving Unemployment: Competing Risks Models With Flexible Baseline Hazards," The Warwick Economics Research Paper Series (TWERPS) 331, University of Warwick, Department of Economics.
  12. Christopher J. Flinn, 1986. "Econometric Analysis of CPS-Type Unemployment Data," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 456-484.
  13. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, Econometric Society, vol. 58(4), pages 757-82, July.
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