To study how the design of unemployment insurance affects people leaving school to find jobs, a model of job search in the presence of UI is developed and estimated for the U.S. and Canada. The level of UI benefits depends upon previous earnings, a fact which creates opposing incentives for unemployed people not receiving benefits. Reservation wages of uninsured youth are found to be more sensitive to UI eligibility rules than to the length of the benefit period. The estimates are also used to analyze differences in preferences and labor market opportunities within the two countries.
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number
904.