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Unemployment Insurance and Unemployment Spells

Bruce D. Meyer
Econometrica
Vol. 58, No. 4 (Jul., 1990), pp. 757-782
Published by: The Econometric Society
DOI: 10.2307/2938349
Stable URL: http://www.jstor.org/stable/2938349
Page Count: 26
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Unemployment Insurance and Unemployment Spells
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Abstract

This paper tests the effects of the level and length of unemployment insurance (UI) benefits on unemployment durations. The paper particularly studies individual behavior during the weeks just prior to when benefits lapse. Higher UI benefits are found to have a strong negative effect on the probability of leaving unemployment. However, the probability of leaving unemployment rises dramatically just prior to when benefits lapse. When the length of benefits is extended, the probability of a spell ending is high in the week benefits were previously expected to lapse. Individual data are used with accurate information on spell durations, and the level and length of benefits. Semiparametric estimation techniques are used and compared to alternative approaches. The semiparametric approach yields more plausible estimates and provides useful diagnostics.

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