Unemployment Durations and Extended Unemployment Benefits in Local Labor Markets
AbstractExtended unemployment benefits programs in the US are triggered by the state insured unemployment rate while intrastate demand conditions often vary dramatically. Some tight local labor markets may therefore exhibit a large adverse effect of extended unemployment benefits. Using a competing risk duration model, this paper measures the size of the entitlement effect across two labor markets facing dramatically different demand conditions. This exercise is important for evaluating potential benefits of proposed sub-state trigger extended benefits programs. The empirical results indicate that, in both recall and new job hazard, the entitlement effect is stronger in low unemployment labor markets. This finding is robust across a number of alternative specifications and econometric approaches. Implementing sub-state trigger extended benefits programs may therefore yield substantial benefits in terms of reducing the adverse incentives of unemployment insurance.
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Bibliographic InfoPaper provided by EconWPA in its series Labor and Demography with number 0012006.
Length: 35 pages
Date of creation: 19 Feb 2001
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- Stepan Jurajda & Frederick J. Tannery, 2003. "Unemployment durations and extended unemployment benefits in local labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(2), pages 324-348, January.
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-02-27 (All new papers)
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