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Analyzing the Relation of Unemployment Insurance to Unemployment

  • Alan L. Gustman

This paper presents a framework for analyzing the relation of unemployment insurance to unemployment and applies the framework to evaluate recent developments in the UI literature and future research needs. Unemployment is decomposed into more basic elements related to the labor market flows which determine unemployment incidence and duration. It is also disaggregated by reason for unemployment -- e.g., entry into the labor force or quit last job. A matrix containing those definitional elements of unemployment which are potentially affected by the UI system forms the basis for organizing the discussion. Each component of unemployment which may be affected by variations in characteristics of the UI system is considered in turn. The discussion of each of these elements focuses on recent theoretical arid empirical studies which analyze how they are influenced by features of the UI system. By proceeding systematically through the elements which comprise unemployment and considering the major behavioral explanations linking the unemployment insurance system to unemployment, it is possible to determine where the analysis has proceeded satisfactorily and where major gaps remain.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0512.

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Date of creation: Jul 1980
Date of revision:
Publication status: published as Gustman, Alan L. "Analyzing the Relation of Unemployment Insurance to Unemployment." Research in Labor Economics, edited by Ronald Ehrenberg, Vol. 5,(1982), pp. 69-114.
Handle: RePEc:nbr:nberwo:0512
Note: LS
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  1. Steven Shavell & Laurence Weiss, 1978. "The Optimal Payment of Unemployment Insurance Benefits over Time," Cowles Foundation Discussion Papers 503, Cowles Foundation for Research in Economics, Yale University.
  2. Salant, Stephen W, 1977. "Search Theory and Duration Data: A Theory of Sorts," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 39-57, February.
  3. Kiefer, Nicholas M & Neumann, George R, 1979. "An Empirical Job-Search Model, with a Test of the Constant Reservation-Wage Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(1), pages 89-107, February.
  4. Raymond Munts, 1970. "Partial Benefit Schedules in Unemployment Insurance: Their Effect on Work Incentive," Journal of Human Resources, University of Wisconsin Press, vol. 5(2), pages 160-176.
  5. George L. Perry, 1972. "Unemployment Flows in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 3(2), pages 245-292.
  6. Stephen T. Marston, 1976. "Employment Instability and High Unemployment Rates," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(1), pages 169-210.
  7. Feldstein, Martin S, 1978. "The Effect of Unemployment Insurance on Temporary Layoff Unemployment," American Economic Review, American Economic Association, vol. 68(5), pages 834-46, December.
  8. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-66, September.
  9. Robert E. Hall, 1978. "The Nature and Measurement of Unemployment," NBER Working Papers 0252, National Bureau of Economic Research, Inc.
  10. Holen, Arlene & Horowitz, Stanley A, 1974. "The Effect of Unemployment Insurance and Eligibility Enforcement on Unemployment," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 403-31, October.
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