UNEMPLOYMENT DURATION, BENEFIT DURATION AND THE BUSINESS CYCLE

In this paper we study the effects of unemployment benefit duration and the business cycle on unemployment duration. We construct durations for individuals entering unemployment from a longitudinal sample of Spanish men in 1987-94. Estimated discrete hazard models indicate that receipt of unemployme...

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Bibliographic Details
Published in:The Economic journal (London) 2002-04, Vol.112 (479), p.223-265
Main Authors: Bover, Olympia, Arellano, Manuel, Bentolila, Samuel
Format: Article
Language:English
Subjects:
Business cycles
Economic benefits
Economic fluctuations
Economic growth rate
Economic models
Economic theory
Gross domestic product
Head of household
Job search
Moral hazard
Social security
Spain
Studies
Temporary labor
Unemployment
Unemployment benefits
Unemployment duration
Unemployment insurance
Unemployment rates
Welfare
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Summary:In this paper we study the effects of unemployment benefit duration and the business cycle on unemployment duration. We construct durations for individuals entering unemployment from a longitudinal sample of Spanish men in 1987-94. Estimated discrete hazard models indicate that receipt of unemployment benefits significantly reduces the hazard of leaving unemployment. At durations of three months, when the largest effects occur, the hazard for workers without benefits is twice as large as that for workers with benefits. Favourable business conditions increase the hazard of leaving unemployment. At sample-period magnitudes, this effect is significantly smaller than that of benefit receipt.
ISSN:0013-0133
1468-0297
DOI:10.1111/1468-0297.00034