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The effect of unemployment insurance on unemployment rate and average duration: evidence from pooled cross-sectional time-series data

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  • Phanindra Wunnava
  • Syed Ali Raza Mehdi

Abstract

This paper empirically analyses the impact of the unemployment insurance system upon the insured unemployment rate and the average duration of unemployment. It employs a simultaneous equation framework because of possible feedback effects between the insured unemployment rate and the average duration of unemployment. Based on a pooled crosssectional time-series model (covering all the 50 states in the USA for the years 1967-88) that corrects for heteroscedasticity and autocorrelation, and the results show some support for the hypothesis that the unemployment insurance system, by providing workers with a safety net, increases both the insured unemployment rate and the duration period.

Suggested Citation

  • Phanindra Wunnava & Syed Ali Raza Mehdi, 1994. "The effect of unemployment insurance on unemployment rate and average duration: evidence from pooled cross-sectional time-series data," Applied Economics Letters, Taylor & Francis Journals, vol. 1(7), pages 114-118.
  • Handle: RePEc:taf:apeclt:v:1:y:1994:i:7:p:114-118 DOI: 10.1080/135048594358104
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    References listed on IDEAS

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    1. Hafer, R. W., 1992. "Inflation and price instability in China: A comment," China Economic Review, Elsevier, vol. 3(2), pages 213-218.
    2. Yi, Gang, 1990. "Inflation and price instability : An empirical study of the People's Republic of China," China Economic Review, Elsevier, vol. 1(2), pages 155-165.
    3. A. R. Pagan & A. D. Hall & P. K. Trivedi, 1983. "Assessing the Variability of Inflation," Review of Economic Studies, Oxford University Press, vol. 50(4), pages 585-596.
    4. Friedman, Milton, 1977. "Nobel Lecture: Inflation and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 451-472, June.
    5. Engle, Robert F, 1983. "Estimates of the Variance of U.S. Inflation Based upon the ARCH Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 15(3), pages 286-301, August.
    6. Glezakos, Constantine & Nugent, Jeffrey B., 1984. "Price instability and inflation: The Latin American case," World Development, Elsevier, vol. 12(7), pages 755-758, July.
    7. Yi, Gang, 1992. "Inflation and price instability in China: Reply," China Economic Review, Elsevier, vol. 3(2), pages 219-223.
    8. Ram, Rati, 1985. "Level and Variability of Inflation: Time-Series and Cross-Section Evidence from 117 Countries," Economica, London School of Economics and Political Science, vol. 52(206), pages 209-223, May.
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    Cited by:

    1. Carl Davidson & Stephen A. Woodbury, 1996. "Unemployment Insurance and Unemployment Implications of the Reemployment Bonus Experiments," Book chapters authored by Upjohn Institute researchers,in: Advisory Council on Unemployment Compensation: Background Papers, volume 3, pages KK1-KK37 W.E. Upjohn Institute for Employment Research.
    2. Carl Davidson & Stephen A. Woodbury, 1996. "Unemployment Insurance and Unemployment Implications of the Reemployment Bonus Experiments," Book chapters authored by Upjohn Institute researchers,in: Advisory Council on Unemployment Compensation: Background Papers, volume 3, pages KK1-KK37 W.E. Upjohn Institute for Employment Research.

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