Unemployment Insurance and Job Quits

We investigate an unexplored avenue through which unemployment insurance increases unemployment. As unemployment insurance benefits rise, workers lose incentive to “preempt” impending layoffs by changing jobs. We formalize this prediction in a job search model and investigate it empirically by estimating a proportional hazard model with data from the 1979 National Longitudinal Survey of Youth, using state‐ and year‐specific algorithms to compute each worker’s expected unemployment insurance benefits. Our estimates reveal that an exogenous increase in benefits deters job quits by a small but statistically significant amount.

[1]  R. Prentice,et al.  Regression analysis of grouped survival data with application to breast cancer data. , 1978, Biometrics.

[2]  J. Carman.  Length of service , 2002 .

[3]  Bruce D. Meyer.  Unemployment Insurance and Unemployment Spells , 1988 .

[4]  Audrey Light.  The Effects of Interrupted Schooling on Wages. , 1995 .

[5]  R. Topel.  Experience Rating of Unemployment Insurance and the Incidence of Unemployment , 1984, The Journal of Law and Economics.

[6]  David Card,et al.  Recent Trends in Insured and Uninsured Unemployment: is There an Explanation? , 1989 .

[7]  K G Manton,et al.  Alternative models for the heterogeneity of mortality risks among the aged. , 1986, Journal of the American Statistical Association.

[8]  Kelly D. Edmiston.  Workers Compensation and State Employment Growth , 2006 .

[9]  Bruce D. Meyer,et al.  The Impact of the Potential Duration of Unemployment Benefits on the Duration of Unemployment , 1988 .

[10]  Finis Welch,et al.  Unemployment Insurance: Survey and Extensions , 1980 .

[11]  Brenda White,et al.  DEPARTMENT OF LABOR , 2006 .

[12]  D. Hamermesh.  Jobless pay and the economy , 1979 .

[13]  N. Fortin,et al.  Occupational Gender Composition and Wages in Canada: 1987-1988 , 1999 .

[14]  Brent R. Moulton.  Random group effects and the precision of regression estimates , 1986 .

[15]  Bruce D. Meyer.  Lessons from the U.S. Unemployment Insurance Experiments , 1995 .

[16]  R. Topel,et al.  On Layoffs and Unemployment Insurance , 1983 .

[17]  Per-Anders Edin,et al.  Time Aggregation and the Distributional Shape of Unemployment Duration , 1992 .

[18]  M. Ureta,et al.  Panel Estimates of Male and Female Job Turnover Behavior: Can Female Nonquitters be Identified? , 1992, Journal of Labor Economics.

[19]  B. McCall,et al.  Testing the Proportional Hazards Assumption in the Presence of Unmeasured Heterogeneity: an Application to the Unemployment Durations of Displaced Workers , 1994 .

[20]  J. Heckman,et al.  New Methods for Analyzing Structural Models of Labor Force Dynamics , 1982 .

[21]  David Card,et al.  Unemployment Insurance Taxes and the Cyclical and Seasonal Properties of Unemployment , 1992 .

[22]  Bruce D. Meyer,et al.  Unemployment Insurance in the United States: Layoff Incentives and Cross Subsidies , 1993, Journal of Labor Economics.

[23]  Brian P. McCall,et al.  Unemployment Insurance Rules, Joblessness, and Part-Time Work , 1996 .

[24]  R. Hall,et al.  The Importance of Lifetime Jobs in the U.S. Economy , 1980 .

[25]  Glenn T. Sueyoshi.  Semiparametric proportional hazards estimation of competing risks models with time-varying covariates , 1992 .

[26]  A. Royalty.  Job‐to‐Job and Job‐to‐Nonemployment Turnover by Gender and Education Level , 1998, Journal of Labor Economics.

[27]  James C. Cox,et al.  Unemployment Insurance and Job Search , 1990 .

[28]  Dale T. Mortensen,et al.  Unemployment Insurance and Job Search Decisions , 1977 .

[29]  Katharine G. Abraham,et al.  Length of Service and Layoffs in Union and Nonunion Work Groups , 1984 .

[30]  John C. Ham,et al.  Unemployment Insurance and Male Unemployment Duration in Canada , 1987, Journal of Labor Economics.