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The Potential Duration of Unemployment Benefits and the Duration of Unemployment

In: Issues in Contemporary Economics

Author

Listed:
  • Lawrence F. Katz

    (Harvard University
    NBER)

  • Bruce D. Meyer

    (NBER
    Northwestern University)

Abstract

Western European countries with relatively generous unemployment insurance (UI) systems (such as Belgium, France, Germany, the Netherlands, and the UK) have suffered much larger and more persistent increases in unemployment in the 1980s than has the USA. These differences in West European and US unemployment experience are largely explained by the substantially longer duration of unemployment spells in Europe. Furthermore, much microeconomic evidence indicates that there is a positive relation between the level of UI benefits received and the duration of the unemployment spells of UI recipients.2 These observations have generated much interest among both academics (for example, Minford, 1985) and the press (for example The Economist, 14–20 May 1988, p. 69) in the hypothesis that work disincentives arising from generous unemployment insurance (UI) systems have played an important role in high and persistent European unemployment in the 1980s.

Suggested Citation

  • Lawrence F. Katz & Bruce D. Meyer, 1991. "The Potential Duration of Unemployment Benefits and the Duration of Unemployment," International Economic Association Series, in: Marc Nerlove (ed.), Issues in Contemporary Economics, chapter 6, pages 128-156, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-11576-1_6
    DOI: 10.1007/978-1-349-11576-1_6
    as

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