Effect Of Unemployment Insurance Research Articles

When Institutions Interact: How the Effects of Unemployment Insurance are Shaped by Retirement Policies

When Institutions Interact: How the Effects of Unemployment Insurance are Shaped by Retirement Policies

Dying to Work: Effects of Unemployment Insurance on Health

Dying to Work: Effects of Unemployment Insurance on Health

The effect of unemployment insurance on alcohol use and abuse following job loss

We investigate whether unemployment insurance (UI) policy affects the drinking behavior of the unemployed. Using NLSY data supplemented with Geocode data, we estimate the effect of benefit replacement rates on changes in individual alcohol consumption following job loss. Identification relies on variation in replacement rates across states and over time. Results indicate that a 100% increase in benefit replacement rate, roughly equivalent to a state moving from the lowest to the highest replacement rate, would, on average, result in unemployed individuals consuming 19.1 additional drinks a month. Looking at the change in an individual's binge drinking upon job loss, individuals receiving the highest level of benefits are 14.7% more likely to increase their binge drinking than those receiving the least generous benefits. We find that individuals’ responsiveness to changes in replacement rates vary based on drinking history, industry labor market conditions, education, and age.

The Effect of Unemployment Insurance on Alcohol Use and Abuse Following Job Loss

We investigate whether unemployment insurance (UI) policy affects the drinking behavior of the unemployed. Using NLSY data supplemented with Geocode data, we estimate the effect of benefit replacement rates on changes in individual alcohol consumption following job loss. Identification relies on variation in replacement rates across states and over time. Results indicate that a 100% increase in benefit replacement rate, roughly equivalent to a state moving from the lowest to the highest replacement rate, would, on average, result in unemployed individuals consuming 19.1 additional drinks a month. Looking at the change in an individual's binge drinking upon job loss, individuals receiving the highest level of benefits are 14.7% more likely to increase their binge drinking than those receiving the least generous benefits. We find that individuals' responsiveness to changes in replacement rates vary based on drinking history, industry labor market conditions, education, and age.

Job search under asymmetric information: endogenous wage dispersion and unemployment stigma

We present a model of directed job search with asymmetric information regarding worker type. While job applicants know their productivity type, firms can only observe the duration of unemployment as well as a noisy signal of worker type. Firms can offer an unscreened wage or a wage that is conditioned on passing the screening and the duration of unemployment. This framework leads to three possible equilibria which depend on model parameter values. We describe the circumstances under which each equilibrium may result and the empirical implications of each equilibrium. Our model sheds light into wage scarring, unemployment duration, wage dispersion and firm-wage sorting, as well as the effects of unemployment insurance and minimum wages on search behavior and the distribution of wages.

Job displacement and social safety net on depressive symptoms in individuals aged 45 years or above: findings from the Korean Longitudinal Study of Aging

ABSTRACTThis study aimed to investigate the relationship between the unemployment experience and depressive symptoms among mid-aged (ages 45–59) and elderly (ages 60 or above) persons and to examine further the effects of unemployment insurance, industrial accident compensation insurance (IACI) and national pension on the stated relationship. Data were used from the Korean Longitudinal Study of Aging (KLoSA) between 2006 and 2012. A total of 1,536 individuals employed at the 2006 baseline were followed. The association between employment status change during 2006 to 2008, 2008 to 2010 or 2010 to 2012 and depressive symptoms in years 2008, 2010 or 2012 were analysed using a generalised estimating equation model. Depressive symptoms were measured with the Center for Epidemiological Studies Depression Scale (CES-D 10) scale. The results showed that the ‘employed to unemployed’ group had statistically significant increases in depression scores in the mid-aged (β = 0.4884,p= 0.0038) and elderly (β = 0.8275,p⩽ 0.0001) categories, compared to the ‘employed to employed’ group. Findings were maintained in groups without a social safety net. Contrastingly, the ‘employed to unemployed’ groups with unemployment insurance and IACI did not show statistically significant increases in depression scores. The ‘employed to unemployed’ category of individuals enrolled in the national pension system exhibited a lower increase of depression. Therefore, an enhanced focus on the mental health of unemployed individuals is required, in addition to the provision of a reliable social safety net.

The Effect of Unemployment Insurance on Temporary Help Services Employment

A model with fixed effects and controls for state-specific linear time trends is developed to analyze the influence of state unemployment insurance taxes on temporary help services employment using state level panel data from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages. Prior research has shown that imperfect experience rating of unemployment insurance taxes increases temporary layoffs and that, conversely, more extensive experience rating leads to a decrease in temporary layoffs. The current analysis demonstrates that more extensive experience rating increases temporary help services agency-intermediated temporary employment. To the extent that the increase in temporary help services employment represents a substitution of temporary help services jobs for traditional direct hire jobs, it implies a negative effect on job quality. Steps to address low unemployment insurance recipiency rates by temporary help services workers may alleviate the impact of unemployment insurance tax structures on temporary help services employment.

The Role of Effort for Self-Insurance and Its Consequences for the Wealth Distribution

I explore the effect of effort as a mechanism to alleviate the idiosyncratic risk faced by individuals in the presence of incomplete markets. I construct a DSGE model where costly effort determines the probability of being employed the next period and a riskless asset can be used to smooth consumption. I first show how effort and assets are inverse related, and that a unique stationary equilibrium exists. Then, in a calibrated version of the model to the US economy, I show that in the stationary equilibrium a positively skewed wealth distribution arises, which is closer to the observed data and has not been obtained by models without ex-ante heterogeneity. I then use the model to evaluate the effect of unemployment insurance on the wealth distribution.

A SHORT REVIEW OF RECENT EVIDENCE ON THE DISINCENTIVE EFFECTS OF UNEMPLOYMENT INSURANCE AND NEW EVIDENCE FROM NEW YORK STATE

This paper examines two sets of evidence on the effects of unemployment insurance (UI). First, we discuss two recent lines of research on the effects of UI, one of which argues that UI is more welfare enhancing than previously thought, and a second that suggests that its distortions are often larger than previously argued. We point out limitations in each research program, but conclude that both significantly advance our knowledge. Second, we summarize the evidence on the effect of UI on claim duration from a 36 percent increase in the maximum weekly benefit in New York State. This policy change sharply increased benefits for a large group of claimants, while leaving them unchanged for a large share of claimants who provide a natural comparison group. The New York benefit increase has the special features that it was unexpected and applied to in-progress spells. These features allow the effects on duration to be more convincingly separated from effects on incidence. The results show a fall in the hazard of leaving UI that coincides with the increase in benefits. The estimated unemployment duration elasticities with respect to the UI benefit range from 0.1–0.2, towards the low end of past estimates. We do not find larger effects for those who are more likely to be liquidity constrained. We also examine the extent of bias in standard methods that identify duration effects through nonlinearities in the benefit schedule, finding mixed results.

Equilibrium Unemployment with Incomplete Markets

This paper integrates a frictional labour market into a general equilibrium model with incomplete markets. Workers are subject to employment shocks and are able to insure themselves by trading a risk free asset. Firms seek to maximise profits by hiring workers in a frictional labour market. In equilibrium, the level of unemployment, the interest rate, and output are jointly determined. Using a continuous time framework, we show the steady state equilibrium is easier to characterise than competing discrete-time models. In particular, we are able to derive a steady state distribution of wealth, consumption and utility in closed form. The model is then used to address the effect of unemployment insurance on welfare.

The Effect of Unemployment Insurance on Unemployment Duration and the Subsequent Employment Stability

This paper studies the effect of unemployment benefits on the unemployment and subsequent employment duration using individual data from the European Community Household Panel, for France, Germany, and the UK. The empirical analysis is based on a two-state mixed proportional hazard model allowing for flexible duration dependence and state specific unobserved heterogeneity. We find that recipients, relative to non-recipients, face lower exit rates from unemployment, while an additional month in unemployment increases their subsequent employment stability. This positive correlation between previous unemployment and subsequent employment duration for the recipients is statistically significant for the short-term unemployed in France and Germany. The results indicate that in these two countries, which provide more generous benefits relative to the UK, recipients who search for a longer period within the first year in unemployment obtain higher employment stability.

The effect of unemployment insurance on weekly hours of work in Canada

Major revisions to the Canadian unemployment insurance program in 1997 created a benefit structure that effectively provides more insurance to workers who are employed for longer workweeks. This anomaly creates an incentive for workers and firms to tailor their weekly work schedules to maximize net program benefits. Analysis of Labour Force Survey data shows that workers and firms responded to these changes by altering weekly hours as expected. This behavioural response demonstrates the sensitivity of hours of work decisions to labour market policies. JEL classification: J65 Les effets de l’assurance‐chômage sur le nombre hebdomadaire d’heures de travail au Canada. Des changements majeurs dans le programme canadien d’assurance‐chômage en 1997 ont mis en place une structure de prestations qui fournissait un support additionnel aux travailleurs qui travaillaient de plus longues heures dans la semaine. Cette anomalie a créé une incitation pour travailleurs et entreprises à ajuster leur cédule hebdomadaire de travail de manière à maximiser les bénéfices nets du programme. L’analyse des données de l’Enquête sur la population active montre que travailleurs et entreprises ont répondu à ces changements en ajustant les heures hebdomadaires de travail comme prévu. Cette réaction montre bien la sensitivité des heures de travail aux politiques du marché du travail.

The effects of unemployment insurance on postunemployment earnings

There is surprisingly little research into the effects of unemployment insurance (UI) on postunemployment wage outcomes. Moreover, the few existing studies are sufficiently varied in their approach and conclusions that experienced observers have reached very different interpretations of their implications. We provide new estimates of the effect of UI on subsequent earnings, using data on workers displaced in the period 1983–1990. Our objective is to provide a systematic evaluation of the approaches used in the existing literature. We find some limited evidence of a favorable impact of UI on earnings, but only when we compare recipients with nonrecipients. Even in this case, our point estimates lie well below those reported in earlier studies that pointed to beneficial UI effects.

Towards Permanent Insecurity: The Social Impact of Unemployment

Numerous studies have revealed a relationship between unemployment and various other social ills. These include poverty, negative shifts in self-esteem for affected individuals and their families, increased anxiety, stress, and associated increases in physical and mental illness, alcoholism, drug abuse, child abuse and family breakdown. Others have linked unemployment to increased racism and discrimination, suicide rates and crime rates. For much of the post-war period the stresses associated with unemployment were mitigated by a social policy net and a programme of unemployment insurance that, by 1971, covered the great majority of the workforce and provided a significant cushion against the immediate effect of job loss. Since the mid-1970s the social supports available to the unemployed have been eroded by government and, in the mid-1990s, major alterations were made to the programmes. The Employment Insurance reforms of 1996, the replacement of the Canadian Assistance Plan by a Canada Health and Social Transfer that permits workfare as a condition of social assistance, and the devolution of training and active employment measures to the provincial level receive detailed analysis. In a context where a world of work is undergoing rapid change and partial attachments to the labour force - part-time, temporary and individual self-employment - are more common, the effect of Unemployment Insurance and social reforms, combined with an overall economic strategy that privileges inflation and deficit control over employment creation, means that permanent insecurity is replacing the relative social security of an earlier era. The social impact of this situation will be traced.

Explaining the transitions out of unemployment in Spain: the effect of unemployment insurance

A multinomial logit model and matched files from the Spanish Active Population Survey (EPA) are used to study transitions out of unemployment among men aged 20-59. In addition to demographic characteristics, other explanatory variables included in the regressions pertain to previous job characteristics and the spell of unemployment. In this article, special attention is paid to the impact of unemployment insurance benefits on the re-employment probability. Consistent with previous work, it is found that receipt of unemployment insurance is associated with lower probabilities of re-employment and of withdrawal from the labour force. More importantly, a differential effect of benefit receipt is obtained when comparing time periods before and after 1992. Indeed, in April of that year the labour authority made eligibility requirements for unemployment insurance more restrictive and curtailed benefit amounts.

Unemployment Insurance and Unemployment: An analysis of the aggregate demand-side effects for postwar Canada

Most of the theoretical and empirical literature on the effects of unemployment insurance (UI) during the last 25 years has focused on the supply-side implications. The object of this article is to argue that much of those discussions over the disincentive effects of UI is misdirected. Our intention is to bring back to the forefront a discussion of the positive macroeconomic role played by UI net injections in stabilizing aggregate demand. Our empirical results using Canadian data for the postwar period support this Keynesian view of the stabilizing effect of UI in contemporary economies.

L'impact de l'assurance chômage et de l'assistance chômage sur le chômage d'équilibre

In this paper, I build a wage bargaining model to study the consequences of unemployment insurance and unemployment assis- tance on unemployment. I show that indexing the unemployment insurance benefit on the last wage earned increase the level of unemployment. I describe necessary conditions to avoid unemployment benefits to affect the level of unemploy- ment. At last, we show that the effect of unemployment insurance on the unemployment rate depends on the concavity of the utility function.

Measuring the Influence of Unemployment Insurance on Unemployment Experiences

This article investigates the comprehensive effects of unemployment insurance (UI) policies on the amount of time and unemployment that individuals report between jobs. The econometric model jointly determines the effects of UI on the lengths of nonemployment spells, the classification of these spells as unemployment, and the likelihood of collecting program benefits. The model carefully attempts to isolate variation in UI benefits attributable to differences in generosity across programs to avoid biases in estimating policy effects induced by other contaminating sources of benefit variation. Using data on men from the National Longitudinal Survey of Youth, the empirical results find (a) UI recipients typically experience longer spells between jobs, at least up to the exhaustion of UI benefits, and report substantially larger fractions of these spells as unemployment; (b) weekly benefit amounts exert no significant influence on the likelihood of UI recipiency, on the length of spells between jobs, or on the fraction of these spells classified as unemployment; and (c) increases in weeks of UI eligibility raise the likelihood of UI collection and lengthen the number of weeks of unemployment between jobs by inducing long spells to become longer and not by altering short-duration behavior.

Qualifying for Unemployment Insurance: An Empirical Analysis

Little is known about the effect of unemployment insurance (UI) on employment durations. In this paper we take advantage of a unique accidental experiment in the Canadian UI system which created an exogenous increase in the entrance requirement (the number of weeks an individual must work to qualify for benefits) of up to 4 weeks in some regions. We identify the effects of this increase primarily by comparing the hazard rate out of employment for the experimental year, 1990, with that for the preceding year in regions where other parameters of the UI system do not change.

The differential impact of unemployment insurance on unemployment duration by income level

While there is a vast literature on the effect of unemployment insurance on unemployment duration, in almost all of these studies the replacement ratio is the key explanatory variable. Does not contest the almost universal findings that the higher the ratio of unemployment income to that of previous earnings, the longer is unemployment duration, but finds that when pre‐unemployment income itself is considered, duration is positively related to that income. Supports the positive view of the merits of unemployment insurance. While past studies emphasize the leisure aspect, unemployment insurance incorporates the ability to improve search through the use of unemployment insurance funds. This use of funds is particularly applicable to high income recipients.