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Employment Spells And Unemployment Insurance Eligibility Requirements

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  • Michael Baker
  • Samuel A. Rea

Abstract

In this paper we examine whether the requirements that workers must satisfy to qualify for unemployment insurance (UI) benefits in any succeeding period of joblessness affect the duration of employment spells. This behavioral consequence of a UI system has been neglected in empirical research, which has instead focused on the effects of UI parameters on the actions of the unemployed. The effect is identified by a unique change in the eligibility requirements of the Canadian UI system in 1990, which increased the weeks of employment required to establish UI eligibility. We provide a variety of estimates of this behavioral effect. In our preferred set of results, we find a significant increase in the employment hazard in the week that an individual satisfies the eligibility requirement in many regions of the country. In the spirit of Feldstein's (1976) study of temporary layoffs, the results provide new evidence of the impact of UI system parameters on the actions of employers and workers. © 1998 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • Michael Baker & Samuel A. Rea, 1998. "Employment Spells And Unemployment Insurance Eligibility Requirements," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 80-94, February.
  • Handle: RePEc:tpr:restat:v:80:y:1998:i:1:p:80-94
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    References listed on IDEAS

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    1. 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.
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    16. Gary Burtless, 1983. "Why Is Insured Unemployment So Low?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 225-254.
    17. Solon, Gary R, 1985. "Work Incentive Effects of Taxing Unemployment Benefits," Econometrica, Econometric Society, vol. 53(2), pages 295-306, March.
    18. Gunderson, Morley & Melino, Angelo, 1990. "The Effects of Public Policy on Strike Duration," Journal of Labor Economics, University of Chicago Press, vol. 8(3), pages 295-316, July.
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    21. Mortensen, Dale T, 1988. "Wages, Separations, and Job Tenure: On-the-Job Specific Training or Matching?," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 445-471, October.
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    Cited by:

    1. Belzil, Christian, 2000. "Unemployment Insurance and Subsequent Job Duration: Job Matching vs Unobserved Heterogeneity," IZA Discussion Papers 116, Institute for the Study of Labor (IZA).
    2. Li, Xianghong & Smith, Barry, 2015. "Diagnostic analysis and computational strategies for estimating discrete time duration models—A Monte Carlo study," Journal of Econometrics, Elsevier, vol. 187(1), pages 275-292.
    3. 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.
    4. 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.
    5. Pedro S. Martins, 2015. "Working to get fired? Regression discontinuity effects of unemployment benefit eligibility on prior employment duration," Working Papers 61, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    6. Hägglund, Pathric, 2007. "Effects of Changes in the Unemployment Insurance Eligibility Requirements on Job Duration - Swedish Evidence," Working Paper Series 3/2007, Stockholm University, Swedish Institute for Social Research.
    7. Tatsiramos, Konstantinos, 2004. "The Effect of Unemployment Insurance on Unemployment Duration and the Subsequent Employment Stability," IZA Discussion Papers 1163, Institute for the Study of Labor (IZA).
    8. Rebollo-Sanz, Yolanda, 2012. "Unemployment insurance and job turnover in Spain," Labour Economics, Elsevier, vol. 19(3), pages 403-426.
    9. Baker, Michael & Melino, Angelo, 2000. "Duration dependence and nonparametric heterogeneity: A Monte Carlo study," Journal of Econometrics, Elsevier, pages 357-393.
    10. Michele Campolieti, 2001. "Bayesian semiparametric estimation of discrete duration models: an application of the dirichlet process prior," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(1), pages 1-22.
    11. Rafael Lalive & Josef Zweim�ller, "undated". "Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change," IEW - Working Papers 105, Institute for Empirical Research in Economics - University of Zurich.
    12. Bernard Fortin & Guy Lacroix, 1997. "Welfare Benefits, Minimum Wage Rate and the Duration of Welfare Spells: Evidence from a Natural Experiment in Canada," CIRANO Working Papers 97s-25, CIRANO.
    13. Mazur, Karol, 2016. "Can welfare abuse be welfare improving?," Journal of Public Economics, Elsevier, pages 11-28.
    14. Hägglund, Pathric, 2000. "Effects of changes in the unemployment insurance eligibility requirements on job duration - Swedish evidence," Working Paper Series 2000:4, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    15. Michele Campolieti, 2003. "On the estimation of hazard models with flexible baseline hazards and nonparametric unobserved heterogeneity," Economics Bulletin, AccessEcon, vol. 3(24), pages 1-10.
    16. Pauline Leung & Christopher O'Leary, 2015. "Should UI Eligibility Be Expanded to Low-Earning Workers? Evidence on Employment, Transfer Receipt, and Income from Administrative Data," Working Papers 591, Princeton University, Department of Economics, Industrial Relations Section..
    17. Michele Campolieti & John N. Lavis, 2000. "Disability Expenditures in Canada, 1970-1996: Trends, Reform Efforts and a Path for the Future," Canadian Public Policy, University of Toronto Press, vol. 26(2), pages 241-164, June.
    18. Christofides, Louis N. & McKenna, C. J., 1995. "Unemployment insurance and moral hazard in employment," Economics Letters, Elsevier, vol. 49(2), pages 205-210, August.
    19. repec:ebl:ecbull:v:3:y:2003:i:24:p:1-10 is not listed on IDEAS
    20. Konstantinos Tatsiramos, 2009. "Unemployment Insurance in Europe: Unemployment Duration and Subsequent Employment Stability," Journal of the European Economic Association, MIT Press, pages 1225-1260.
    21. Eberwein, Curtis & Ham, John C. & LaLonde, Robert J., 2002. "Alternative methods of estimating program effects in event history models," Labour Economics, Elsevier, vol. 9(2), pages 249-278, April.
    22. Stepan Jurajda, 2001. "In ow into Unemployment: Employment Spells and Unemployment Insurance," Labor and Demography 0012008, EconWPA.

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    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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