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Unemployment Benefit Levels and Search Activity

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  • Schmitt, John
  • Wadsworth, Jonathan

Abstract

This paper endogenises the job offer arrival rate in a standard search model in order to test the hypothesis that unemployment-related benefits may affect the job search behavior of unemployed workers independently of any reservation wage effect. Using a pooled cross-section of 1484 unemployed British men from the 1979 to 1982 General Household Surveys, we find that the level of benefit has no significant effect on unemployed search behavior. Any disincentive effect of an increase in benefits on the return to job search is offset by a positive stimulus to search from increased income. Factors which do have an important impact on search activity include: age, unemployment duration, occupation, and education level. Further, local labor market conditions affect only the job search behavior of the short-term unemployed. Copyright 1993 by Blackwell Publishing Ltd

Suggested Citation

  • Schmitt, John & Wadsworth, Jonathan, 1993. "Unemployment Benefit Levels and Search Activity," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(1), pages 1-24, February.
  • Handle: RePEc:bla:obuest:v:55:y:1993:i:1:p:1-24
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    Cited by:

    1. Andrea Morescalchi, 2016. "The Puzzle Of Job Search And Housing Tenure: A Reconciliation Of Theory And Empirical Evidence," Journal of Regional Science, Wiley Blackwell, vol. 56(2), pages 288-312, March.
    2. Ortega, Javier & Rioux, Laurence, 2010. "On the extent of re-entitlement effects in unemployment compensation," Labour Economics, Elsevier, vol. 17(2), pages 368-382, April.
    3. Guell, Maia, 2001. "Fixed-term contracts and the duration distribution of unemployment," LSE Research Online Documents on Economics 20122, London School of Economics and Political Science, LSE Library.
    4. Böheim, René & Taylor, Mark P., 2001. "Job search methods, intensity and success in Britain in the 1990s," ISER Working Paper Series 2001-07, Institute for Social and Economic Research.
    5. John T. Addison & Pedro Portugal, 2002. "Job search methods and outcomes," Oxford Economic Papers, Oxford University Press, vol. 54(3), pages 505-533, July.
    6. Sarah Brown & Karl Taylor, 2008. "Reservation Wages, Expected Wages and Labour Market Outcomes: Analysis of Individual Level Panel Data," Working Papers 2008008, The University of Sheffield, Department of Economics, revised Jul 2008.
    7. Battu, Harminder & Seaman, Paul & Zenou, Yves, 2011. "Job contact networks and the ethnic minorities," Labour Economics, Elsevier, vol. 18(1), pages 48-56, January.
    8. Alan Manning, 2005. "You Can't Always Get What You Want: the Impact of the Jobseeker's Allowance," CEP Discussion Papers dp0697, Centre for Economic Performance, LSE.
    9. Parker, Simon C. & van Praag, Mirjam C., 2006. "The Entrepreneur's Mode of Entry: Business Takeover or New Venture Start," IZA Discussion Papers 2382, Institute for the Study of Labor (IZA).
    10. Stephan Thomsen & Mick Wittich, 2009. "Which one to choose? New evidence on the choice and success of job search methods," FEMM Working Papers 09022, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    11. Van der Linden, Bruno & Dor, Eric, 1998. "The net effect of unemployment benefits, sanctions and training on aggregate unemployment outflows," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 07 Sep 2000.
    12. Alexandra Heath, 1999. "Job-search Methods, Neighbourhood Effects and the Youth Labour Market," RBA Research Discussion Papers rdp1999-07, Reserve Bank of Australia.
    13. Bruno Van der Linden & Eric Dor, 2003. "The net effect of unemployment benefits, sanctions and training on regular employment," Working Papers 2003-ECO-01, IESEG School of Management.
    14. repec:eee:labchp:v:3:y:1999:i:pc:p:3085-3139 is not listed on IDEAS

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