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Title:Unemployment Insurance and Subsequent Job Duration: Job Matching vs Unobserved Heterogeneity PDF Logo
Authors:Belzil, Christian
Issue Date:2000
Series/Report no.:IZA Discussion paper series 116
Abstract: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.
Subjects:Unemployment insurance
unemployment duration
job duration
job matching
JEL:J65
J64
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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