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Is longer unemployment rewarded with longer job tenure?

  • Miki Kohara

    (Osaka School of International Public Policy, Osaka University)

  • Masaru Sasaki

    (Institute of Social and Economic Research, Osaka University)

  • Tomohiro Machikita

    (Institute of Developing Economies, Inter-disciplinary Studies Center, Japan External Trade)

This paper examines whether or not a prolonged unemployment period can raise the quality of job matching after unemployment. We focus on job tenure as an indicator of a good quality job match after unemployment. We match two sets of Japanese administrative data compiled by the public employment security offices: one includes information about the circumstances of job seekers receiving unemployment insurance, and the other includes information about job seekers applying for jobs. We first show a negative relationship between unemployment duration and the subsequent job duration. Restricting the sample to job seekers who lower their reservation wage in the final 59 days before expiration of unemployment insurance, we secondly show an even greater negative effect of unemployment duration on the following job duration. The importance lies not only in the duration of unemployment. If job seekers keep a high reservation wage because of the benefits of unemployment insurance, and lower it in response to the expiration of insurance, prolonged unemployment will result in short job duration after unemployment.

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Paper provided by Osaka School of International Public Policy, Osaka University in its series OSIPP Discussion Paper with number 11E001.

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Length: 30 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:osp:wpaper:11e001
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  1. M. Daniele Paserman, 2004. "Job Search and Hyperbolic Discounting: Structural Estimation and Policy Evaluation," 2004 Meeting Papers 99, Society for Economic Dynamics.
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  8. Mário Centeno, 2002. "The Match Quality Gains from Unemployment Insurance," Working Papers w200209, Banco de Portugal, Economics and Research Department.
  9. Kohara, Miki & Sasaki, Masaru & Machikita, Tomohiro, 2012. "Is Longer Unemployment Rewarded with Longer Job Tenure?," IZA Discussion Papers 7077, Institute for the Study of Labor (IZA).
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  28. Jan C. van Ours & Milan Vodopivec, 2006. "How Shortening the Potential Duration of Unemployment Benefits Affects the Duration of Unemployment: Evidence from a Natural Experiment," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 351-378, April.
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