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Unemployment Insurance and the Rate of Re-employment of Displaced Workers

  • Fallick, Bruce Chelimsky

The rate of transition from unemployment to re-employment for a sample of displaced workers is estimated using a semiparametric specification which allows the effects of unemployment insurance benefits to vary over time. Three results which would be missed by more restrictive specifications demonstrate the value of this approach: (1) The effects of UI benefits decline and eventually disappear as the date of expiration approaches, (2) Expiration of UI benefits are an inadequate explanation of the spikes commonly observed in nonparametric sample hazard rates for re-employment, (3) UI benefits do not significantly affect the rate at which a displaced worker becomes re-employed in his or her previous industry, but reduce the rate for transitions to other industries. Copyright 1991 by MIT Press.

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Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 73 (1991)
Issue (Month): 2 (May)
Pages: 228-35

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Handle: RePEc:tpr:restat:v:73:y:1991:i:2:p:228-35
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  1. Gary Solon, 1982. "Work Incentive Effects of Taxing Employment Benefits," Working Papers 529, Princeton University, Department of Economics, Industrial Relations Section..
  2. Jerry Hausman & Aaron Han, 1986. "Semiparametric Estimation of Duration and Competing Risk Models," Working papers 450, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Martin Feldstein & James M. Poterba, 1982. "Unemployment Insurance and Reservation Wages," NBER Working Papers 1011, National Bureau of Economic Research, Inc.
  4. John M. Barron & Wesley Mellow, 1979. "Search Effort in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 389-404.
  5. Kathleen P. Classen, 1977. "The effect of unemployment insurance on the duration of unemployment and subsequent earnings," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 438-444, July.
  6. Louis Jacobson, 1984. "A tale of employment decline in two cities: How bad was the worst of times?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 37(4), pages 557-569, July.
  7. Whipple, David, 1973. "A Generalized Theory of Job Search," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1170-88, Sept.-Oct.
  8. William F. Barnes, 1975. "Job Search Models, the Duration of Unemployment, and the Asking Wage: Some Empirical Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 10(2), pages 230240.
  9. Salop, S C, 1973. "Systematic Job Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 40(2), pages 191-201, April.
  10. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
  11. Lancaster, Tony, 1979. "Econometric Methods for the Duration of Unemployment," Econometrica, Econometric Society, vol. 47(4), pages 939-56, July.
  12. Gronau, Reuben, 1971. "Information and Frictional Unemployment," American Economic Review, American Economic Association, vol. 61(3), pages 290-301, June.
  13. Michael Podgursky & Paul Swaim, 1987. "Job displacement and earnings loss: Evidence from the Displaced Worker Survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 41(1), pages 17-29, October.
  14. Elazar Berkovitch, 1985. "Reputation Effect in Equilibrium Search and Bargaining- A Stigma Theory of Unemployment Duration," Discussion Papers 668, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. Mortensen, Dale T, 1970. "Job Search, the Duration of Unemployment, and the Phillips Curve," American Economic Review, American Economic Association, vol. 60(5), pages 847-62, December.
  16. Ehrenberg, Ronald G & Oaxaca, Ronald L, 1976. "Unemployment Insurance, Duration of Unemployment, and Subsequent Wage Gain," American Economic Review, American Economic Association, vol. 66(5), pages 754-66, December.
  17. Janice Fanning Madden, 1988. "The Distribution of Economic Losses among Displaced Workers: Measurement Methods Matter," Journal of Human Resources, University of Wisconsin Press, vol. 23(1), pages 93-107.
  18. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February.
  19. Warner, John T & Poindexter, J Carl, Jr & Fearn, Robert M, 1980. "Employer-Employee Interaction and the Duration of Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 94(2), pages 211-33, March.
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