Resource title

Unemployment Insurance and Subsequent Job Duration: Job Matching vs Unobserved Heterogeneity

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Resource description

The relationship between unemployment benefit duration, unemployment duration and subsequent job duration is investigated using a multi-state duration model with state specific unobserved heterogeneity. I allow maximum benefit duration to be correlated with unemployment duration as well as accepted job duration. I examine two potential explanations for the relationship between unemployment and job spell durations; UI benefits increase job matching quality vs unobserved heterogeneity. I find that the escape rate out of unemployment seems to raise significantly within 5 weeks of benefit termination and new jobs accepted within this 5 week period seem to have a higher dissolution rate. At the same time, unobserved heterogeneity is also found to explain the correlation between unemployment and job duration. Various simulations indicate that increasing the maximum benefit duration by one week will raise expected unemployment duration by 1 to 1.5 days and expected job duration by 0.5 to 0.9 day.

Resource author

Christian Belzil

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/20957

Resource license

Adapt according to the presented license agreement and reference the original author.