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Is longer unemployment rewarded with longer job tenure?

  • Kohara, Miki
  • Sasaki, Masaru
  • Machikita, Tomohiro

This paper examines whether or not a prolonged unemployment period can raise the quality of job matching after unemployment. We focus on job tenure as an indicator of a good quality job match after unemployment. We match two sets of Japanese administrative data compiled by the public employment security offices: one includes information about the circumstances of job seekers receiving unemployment insurance, and the other includes information about job seekers applying for jobs. We first show a negative relationship between unemployment duration and the subsequent job duration. Restricting the sample to job seekers who changed search behaviors in the final 59days before expiration of unemployment insurance, we secondly show an even greater negative effect of unemployment duration on the following job duration. The importance lies not only in the duration of unemployment. If job seekers keep a high reservation wage and a low search intensity because of the benefits of unemployment insurance, and change them in response to the expiration of insurance, prolonged unemployment will result in short job duration after unemployment.

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Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 29 (2013)
Issue (Month): C ()
Pages: 44-56

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Handle: RePEc:eee:jjieco:v:29:y:2013:i:c:p:44-56
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  1. Addison, John T. & Blackburn, McKinley L., 2000. "The effects of unemployment insurance on postunemployment earnings," Labour Economics, Elsevier, vol. 7(1), pages 21-53, January.
  2. Carling, Kenneth & Holmlund, Bertil & Vejsiu, Altin, 2001. "Do Benefit Cuts Boost Job Finding? Swedish Evidence from the 1990s," Economic Journal, Royal Economic Society, vol. 111(474), pages 766-90, October.
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  12. Poterba, James M & Summers, Lawrence H, 1995. "Unemployment Benefits and Labor Market Transitions: A Multinomial Logit Model with Errors in Classification," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 207-16, May.
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  17. Johannes F. Schmieder & Till M. von Wachter & Stefan Bender, 2012. "The Long-Term Effects of Unemployment Insurance Extensions on Employment," NBER Working Papers 17814, National Bureau of Economic Research, Inc.
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  20. Kohara, Miki & Sasaki, Masaru & Machikita, Tomohiro, 2013. "Is longer unemployment rewarded with longer job tenure?," Journal of the Japanese and International Economies, Elsevier, vol. 29(C), pages 44-56.
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  27. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
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