IDEAS home Printed from https://ideas.repec.org/a/eee/labeco/v41y2016icp228-245.html
   My bibliography  Save this article

Job insecurity, unemployment insurance and on-the-job search. Evidence from older American workers

Author

Listed:
  • Gutierrez, Italo A.

Abstract

I analyse how unemployment insurance (UI) affects on-the-job search among older workers in the US, allowing for job insecurity. Using a control function approach, I find that one-standard deviation in the potential replacement rate from UI (about 12.5 percentage points) discourages on-the-job search by 0.55 percentage points, thereby reducing the probability of starting a new job at a different employer. This average effect is small because UI does not affect the search behaviour of workers who do not believe to be at risk of job loss, the majority of the employed population over 50. In contrast, a one-standard deviation increase in the potential replacement rate reduces the probability of on-the-job-search by as much as 3.5 percentage points for workers who state a 90% probability of losing their jobs. I also find suggestive evidence that this effect decreases with wages, although the estimated effects across quartiles of the wage distribution are not statistically different from each other. I also find that UI discourages on-the-job search in similar magnitudes for men and women, although the effects are only statistically significant for men.

Suggested Citation

  • Gutierrez, Italo A., 2016. "Job insecurity, unemployment insurance and on-the-job search. Evidence from older American workers," Labour Economics, Elsevier, vol. 41(C), pages 228-245.
  • Handle: RePEc:eee:labeco:v:41:y:2016:i:c:p:228-245
    DOI: 10.1016/j.labeco.2016.05.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927537116300252
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Audrey Light & Yoshiaki Omori, 2004. "Unemployment Insurance and Job Quits," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 159-188, January.
    2. Christofides, Louis N & McKenna, C J, 1996. "Unemployment Insurance and Job Duration in Canada," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 286-312, April.
    3. Kleinjans, Kristin J. & van Soest, Arthur, 2010. "Nonresponse and Focal Point Answers to Subjective Probability Questions," IZA Discussion Papers 5272, Institute for the Study of Labor (IZA).
    4. Melvin Stephens, 2004. "Job Loss Expectations, Realizations, and Household Consumption Behavior," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 253-269, February.
    5. Krueger, Alan B. & Mueller, Andreas, 2010. "Job search and unemployment insurance: New evidence from time use data," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 298-307, April.
    6. Bruce D. Meyer, 1995. "Lessons from the U.S. Unemployment Insurance Experiments," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 91-131, March.
    7. Burgess, Paul L & Low, Stuart A, 1992. "Preunemployment Job Search and Advance Job Loss Notice," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 258-287, July.
    8. Paul L. Burgess & Stuart A. Low, 1998. "How do Unemployment Insurance and Recall Expectations Affect on-the-job Search among Workers Who Receive Advance Notice of Layoff?," ILR Review, Cornell University, ILR School, vol. 51(2), pages 241-252, January.
    9. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, vol. 73(4), pages 541-559, September.
    10. Janet Currie & Jonathan Gruber, 1996. "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 431-466.
    11. Schwerdt, Guido, 2011. "Labor turnover before plant closure: "Leaving the sinking ship" vs. "Captain throwing ballast overboard"," Labour Economics, Elsevier, vol. 18(1), pages 93-101, January.
    12. Dale T. Mortensen, 1977. "Unemployment Insurance and Job Search Decisions," ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
    13. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
    14. Paul A. Lengermann & Lars Vilhuber, 2002. "Abandoning the Sinking Ship: The Composition of Worker Flows Prior to Displacement," Longitudinal Employer-Household Dynamics Technical Papers 2002-11, Center for Economic Studies, U.S. Census Bureau.
    15. Haan, Peter & Prowse, Victoria L., 2010. "The Design of Unemployment Transfers: Evidence from a Dynamic Structural Life-Cycle Model," IZA Discussion Papers 4792, Institute for the Study of Labor (IZA).
    16. Kenneth A. Couch & Dana W. Placzek, 2010. "Earnings Losses of Displaced Workers Revisited," American Economic Review, American Economic Association, vol. 100(1), pages 572-589, March.
    17. Carlos Carrillo-Tudela & Eric Smith, 2017. "Search Capital," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 191-211, January.
    18. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-957, October.
    19. Louis S. Jacobson & Robert J. LaLonde & Daniel G. Sullivan, 1993. "Long-term earnings losses of high-seniority displaced workers," Economic Perspectives, Federal Reserve Bank of Chicago, issue Nov, pages 2-20.
    20. Jesse Rothstein, 2011. "Unemployment Insurance and Job Search in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 143-213.
    21. Rebollo-Sanz, Yolanda, 2012. "Unemployment insurance and job turnover in Spain," Labour Economics, Elsevier, vol. 19(3), pages 403-426.
    22. Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2012. "The Effects of Extended Unemployment Insurance Over the Business Cycle: Evidence from Regression Discontinuity Estimates Over 20 Years," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 701-752.
    23. Card, David & Levine, Phillip B., 1994. "Unemployment insurance taxes and the cyclical and seasonal properties of unemployment," Journal of Public Economics, Elsevier, vol. 53(1), pages 1-29, January.
    24. Marcus Hagedorn & Iourii Manovskii & Kurt Mitman, 2015. "The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle?," NBER Working Papers 20884, National Bureau of Economic Research, Inc.
    25. Currie, Janet & Gruber, Jonathan, 1996. "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1263-1296, December.
    26. Pierre-Carl Michaud & Italo A. Gutierrez, 2015. "Employer downsizing and older workers’ health," CIRANO Working Papers 2015s-34, CIRANO.
    27. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-136, Winter.
    28. Topel, Robert H, 1984. "Experience Rating of Unemployment Insurance and the Incidence of Unemployment," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 61-90, April.
    29. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, vol. 50(4), pages 877-907, May.
    30. David A. Green & Timothy Sargent, 1998. "Unemployment Insurance and Job Durations: Seasonal and Non-Seasonal Jobs," Canadian Journal of Economics, Canadian Economics Association, vol. 31(2), pages 247-278, May.
    31. Bruce C. Fallick, 1996. "A Review of the Recent Empirical Literature on Displaced Workers," ILR Review, Cornell University, ILR School, vol. 50(1), pages 5-16, October.
    32. Winter-Ebmer, Rudolf, 2003. "Benefit duration and unemployment entry: A quasi-experiment in Austria," European Economic Review, Elsevier, vol. 47(2), pages 259-273, April.
    33. Bruce C. Fallick & Charles A. Fleischman, 2001. "The importance of employer-to-employer flows in the U.S. labor market," Finance and Economics Discussion Series 2001-18, Board of Governors of the Federal Reserve System (U.S.).
    34. Johannes F. Schmieder† & Till von Wachter & Stefan Bender, 2011. "The Effects Of Extended Unemployment Insurance Over The Business Cycle: Evidence From Regression Discontinuity Estimates Over Twenty Years," Boston University - Department of Economics - Working Papers Series WP2011-063, Boston University - Department of Economics.
    35. Green, David A & Riddell, W Craig, 1997. "Qualifying for Unemployment Insurance: An Empirical Analysis," Economic Journal, Royal Economic Society, vol. 107(440), pages 67-84, January.
    36. Christofides, Louis N. & McKenna, C. J., 1995. "Unemployment insurance and moral hazard in employment," Economics Letters, Elsevier, vol. 49(2), pages 205-210, August.
    37. Jurajda, Stepan, 2002. "Estimating the effect of unemployment insurance compensation on the labor market histories of displaced workers," Journal of Econometrics, Elsevier, vol. 108(2), pages 227-252, June.
    38. Rafael Lalive & Jan Ours & Josef Zweimüller, 2011. "Equilibrium unemployment and the duration of unemployment benefits," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1385-1409, October.
    39. Ann Huff Stevens & Sewin Chan, 1999. "Employment and Retirement Following a Late-Career Job Loss," American Economic Review, American Economic Association, vol. 89(2), pages 211-216, May.
    40. Stepan Jurajda, 2003. "Unemployment Insurance and the Timing of Layoffs and Recalls," LABOUR, CEIS, vol. 17(3), pages 383-389, September.
    41. Feldstein, Martin S, 1978. "The Effect of Unemployment Insurance on Temporary Layoff Unemployment," American Economic Review, American Economic Association, vol. 68(5), pages 834-846, December.
    42. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    43. Manski, Charles F. & Molinari, Francesca, 2010. "Rounding Probabilistic Expectations in Surveys," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(2), pages 219-231.
    44. Anderson, Patricia M & Meyer, Bruce D, 1993. "Unemployment Insurance in the United States: Layoff Incentives and Cross Subsidies," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 70-95, January.
    45. Chan, Sewin & Stevens, Ann Huff, 2001. "Job Loss and Employment Patterns of Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 484-521, April.
    46. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Italo A. Gutierrez & Pierre-Carl Michaud, 2017. "Whistle While You Work: Job Insecurity and Older Workers' Mental Health in the United States," Cahiers de recherche 1702, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    2. Achatz, Juliane & Gundert, Stefanie, 2017. "Arbeitsqualität und Jobsuche von erwerbstätigen Grundsicherungsbeziehern," IAB-Forschungsbericht 201710, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:41:y:2016:i:c:p:228-245. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/labeco .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.