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Unemployment Insurance and Job Quits

Author

Listed:
  • Audrey Light

    (Ohio State University)

  • Yoshiaki Omori

    (Otaru University of Commerce, Japan)

Abstract

We investigate an unexplored avenue through which unemployment insurance increases unemployment. As unemployment insurance benefits rise, workers lose incentive to "preempt" impending layoffs by changing jobs. We formalize this prediction in a job search model and investigate it empirically by estimating a proportional hazard model with data from the 1979 National Longitudinal Survey of Youth, using state- and year-specific algorithms to compute each worker's expected unemployment insurance benefits. Our estimates reveal that an exogenous increase in benefits deters job quits by a small but statistically significant amount.

Suggested Citation

  • Audrey Light & Yoshiaki Omori, 2004. "Unemployment Insurance and Job Quits," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 159-188, January.
    • Handle: RePEc:ucp:jlabec:v:22:y:2004:i:1:p:159-188
    DOI: 10.1086/380406
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    References listed on IDEAS

    as
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    Cited by:

    1. Gutierrez, Italo A., 2016. "Job insecurity, unemployment insurance and on-the-job search. Evidence from older American workers," Labour Economics, Elsevier, vol. 41(C), pages 228-245.
    2. Parolin, Zachary & Pignatti, Clemente, 2024. "Optimal Unemployment Insurance with Program Interactions," IZA Discussion Papers 17095, IZA Network @ LISER.
    3. Albanese, Andrea & Picchio, Matteo & Ghirelli, Corinna, 2020. "Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs?," Labour Economics, Elsevier, vol. 65(C).
    4. Kelly D. Edmiston, 2006. "Workers’ Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145, February.
    5. Wang, Xiaobing, 2007. "Labor market behavior of Chinese rural households during transition," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 42, number 92321.
    6. Gao, Mingze & Leung, Henry & Qiu, Buhui, 2021. "Organization capital and executive performance incentives," Journal of Banking & Finance, Elsevier, vol. 123(C).
    7. Kyyrä, Tomi & Pesola, Hanna & Rissanen, Aarne, 2017. "Unemployment Insurance in Finland: A Review of Recent Changes and Empirical Evidence on Behavioral Responses," Research Reports 184, VATT Institute for Economic Research.
    8. Goensch, Johannes & Gulyas, Andreas & Kospentaris, Ioannis, 2024. "Worker mobility and UI extensions," European Economic Review, Elsevier, vol. 162(C).
    9. Gordon B. Dahl & Matthew Knepper, 2026. "Why Is Workplace Sexual Harassment Underreported? The Value of Outside Options amid the Threat of Retaliation," American Economic Review, American Economic Association, vol. 116(3), pages 897-933, March.
    10. Alice Hsieh & Cheng-Few Lee & Hai-Chin Yu, 2025. "Organizational capital and debt pricing: evidence from bank loans and public bonds," Review of Quantitative Finance and Accounting, Springer, vol. 65(4), pages 1671-1708, November.
    11. Garcia-Louzao, Jose, 2022. "Workers’ job mobility in response to severance pay generosity," Labour Economics, Elsevier, vol. 75(C).
    12. Root, Andrew & Yung, Kenneth, 2022. "Resolving agency and product market views of cash holdings," Research in International Business and Finance, Elsevier, vol. 59(C).
    13. D. G. C. Britto, 2016. "Unemployment Insurance and the Duration of Employment: Evidence from a Regression Kink Design," Working Papers wp1058, Dipartimento Scienze Economiche, Universita' di Bologna.
    14. Diogo Britto, 2016. "Unemployment Insurance and the Duration of Employment: Theory and Evidence from a Regression Kink Design," DISCE - Working Papers del Dipartimento di Economia e Finanza def048, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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