Examining the Relationship between Unemployment Insurance Coverage and Unemployment Duration in Iran before and after the COVID-19

Unemployment coverage through social insurance is one of the public policy measures aimed at mitigating the social consequences of unemployment. However, providing generous benefits over a prolonged period, according to job search theory, can negatively affect the re-employment incentives of the unemployed and lead to longer unemployment durations. This study uses combined quarterly data from Iran’s Labor Force Survey conducted by the Statistical Center of Iran for the years 2018–2023 to examine the relationship between unemployment insurance coverage and unemployment duration. Using this combined dataset, the study evaluates how this relationship changed as a result of the COVID-19 pandemic compared to the pre-pandemic period. The findings indicate that women, single individuals, urban residents, young people, highly educated individuals, those who left work due to low income, dismissal, retirement, or illness, apprentices, government employees, self-employed and freelance workers, individuals with limited work experience, and those seeking employment in the service sector, on average, experience longer unemployment durations, holding other factors constant. Furthermore, it was found that in eight provinces—Sistan and Baluchestan, Bushehr, Semnan, Yazd, Hormozgan, Alborz, East Azerbaijan, and Kerman—the average unemployment duration is longer than in Tehran. Regarding the main research question, the results confirm a positive relationship between unemployment insurance coverage and unemployment duration. Unemployment benefit recipients’ experience, on average, 1.453 months longer unemployment spells. Notably, the effect of unemployment insurance coverage on unemployment duration during the COVID-19 pandemic increased to 2.651 months, representing an intensification of approximately 1.198 months.