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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.

Suggested Citation

  • Fallick, Bruce Chelimsky, 1991. "Unemployment Insurance and the Rate of Re-employment of Displaced Workers," The Review of Economics and Statistics, MIT Press, vol. 73(2), pages 228-235, May.
  • Handle: RePEc:tpr:restat:v:73:y:1991:i:2:p:228-35

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    References listed on IDEAS

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    Cited by:

    1. T. Addison, John & Portugal, Pedro, 1998. "Some specification issues in unemployment duration analysis," Labour Economics, Elsevier, vol. 5(1), pages 53-66, March.
    2. Bruce Fallick & Keunkwan Ryu, 2007. "The Recall and New Job Search of Laid-Off Workers: A Bivariate Proportional Hazard Model with Unobserved Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 313-323, May.
    3. Pedro Portugal & John T. Addison, 2008. "Six Ways To Leave Unemployment," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(4), pages 393-419, September.
    4. Richard Layte & Tim Callan, 2001. "Unemployment, Welfare Benefits and the Financial Incentive to Work," The Economic and Social Review, Economic and Social Studies, vol. 32(2), pages 103-129.
    5. Knut Roed & Tao Zhang, 2003. "Does Unemployment Compensation Affect Unemployment Duration?," Economic Journal, Royal Economic Society, vol. 113(484), pages 190-206, January.
    6. John T. Addison & Pedro Portugal, 2003. "Unemployment Duration Competing and Defective Risks," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
    7. McCall, Brian & Chi, Wei, 2008. "Unemployment insurance, unemployment durations and re-employment wages," Economics Letters, Elsevier, vol. 99(1), pages 115-118, April.
    8. Addison, John T. & Portugal, Pedro, 2004. "How does the unemployment insurance system shape the time profile of jobless duration?," Economics Letters, Elsevier, vol. 85(2), pages 229-234, November.
    9. David Card & Raj Chetty & Andrea Weber, 2007. "The Spike at Benefit Exhaustion: Leaving the Unemployment System or Starting a New Job?," American Economic Review, American Economic Association, vol. 97(2), pages 113-118, May.
    10. Alfonso Alba & Jose Maria Arranz & Fernando Muñoz-Bullón, 2012. "Re-employment probabilities of unemployment benefit recipients," Applied Economics, Taylor & Francis Journals, vol. 44(28), pages 3645-3664, October.
    11. Bratberg, Espen & Vaage, Kjell, 2000. "Spell durations with long unemployment insurance periods," Labour Economics, Elsevier, vol. 7(2), pages 153-180, March.
    12. Roed,K. & Zhang,T., 1999. "Unemployment duration in a non-stationary macroeconomic environment," Memorandum 14/1999, Oslo University, Department of Economics.
    13. Konstantinos Tatsiramos & Jan C. Ours, 2014. "Labor Market Effects Of Unemployment Insurance Design," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 284-311, April.
    14. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 1998. "Equilibrium unemployment insurance," Economics Working Papers 605, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 1999.
    15. José Mª Arranz & Juan Muro, 2004. "An extra time duration model with application to unemployment duration under benefits in Spain," Hacienda Pública Española, IEF, vol. 171(4), pages 133-156, december.
    16. Shigeru Fujita, 2010. "Economic effects of the unemployment insurance benefit," Business Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 20-27.
    17. Stepan Jurajda, 1999. "Unemployment Outflow and Unemployment Insurance Taxes," CERGE-EI Working Papers wp143, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    18. 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.
    19. Alba, Alfonso & Arranz, José M. & Muñoz-Bullón, Fernando, 2006. "Unemployment duration, unemployment benefits and recalls," DEE - Working Papers. Business Economics. WB wb066218, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.

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