Mortensen, Dale T.
July 1977
Industrial & Labor Relations Review;Jul77, Vol. 30 Issue 4, p505
Academic Journal
There are two major conclusions to be drawn from the analysis. First, the effect of UI benefits on measured search unemployment is theoretically ambiguous once the institutional features of most states' programs are taken into account. Specifically, because the potential benefit period per unemployment spell is limited and because only workers experiencing employer-initiated unemployment qualify, workers receiving no benefits (new entrants, exhaustees, and those who quit) have an incentive to become employed more rapidly than would otherwise be the case. Second, although this theoretical influence has not been tested directly, existing empirical evidence is consistent with it. The evidence for a positive benefit effect on duration presented by Holen is inconclusive because the duration measure used is weeks of compensation rather than weeks of unemployment.15 Indeed, the theory predicts Holen's result when the duration of exhaustees is truncated. Classen's result is also predicted by the model.16 However, her estimate of the effect on duration is biased upward if the members of the sample not receiving the increase during the observed unemployment spell are encouraged by it to become employed more rapidly, as our theory suggests. The evidence for a positive effect on duration reported by Ehrenberg and Oaxaca cannot be questioned on these grounds." Nevertheless, it does not imply that measured unemployment increases with unemployment compensation for the following reasons. Suppose that the expected unemployment duration of qualified workers (D) increases in response to an increase in compensation. The stock of such workers in a steady state is U = &deltal;ND where δ is the layoff rate and N is the number of employed workers. If new entrants equal a constant proportion (α) of the labor force (L) and the flow of those who quit equals a constant proportion (β) of the employed stock (N).


Related Articles

  • WHAT HAVE WE LEARNED FROM EMPIRICAL STUDIES OF UNEMPLOYMENT INSURANCE? Welch, Finis // Industrial & Labor Relations Review;Jul77, Vol. 30 Issue 4, p451 

    The article discusses the effects of unemployment insurance (UI) on the duration of unemployment and on wages or earnings in subsequent employment. For an individual, UI reduces costs of unemployment and raises job search costs relative to costs of pure leisure during unemployment. For employees...

  • THE EFFECT OF UNEMPLOYMENT INSURANCE ON THE SEARCH PROCESS. Barron, John M.; Gilley, Otis W. // Industrial & Labor Relations Review;Apr79, Vol. 32 Issue 3, p363 

    The article examines the impact of unemployment insurance (UI) on the search process or search strategy of two groups of unemployed individuals. The two groups of unemployed individuals are those currently receiving UI benefits and those who though not currently eligible for UI benefits might...

  • Wages and Employment Summary.  // Compensation & Working Conditions;Jan2003, pN.PAG 

    Provides a summary of reports on wages and employment in the U.S. as of December 2002. Average weekly wages of all workers covered by state and federal unemployment insurance programs in the second quarter of 2002; Industry sectors that recorded over-the-year declines in average weekly wages in...

  • UNEMPLOYMENT INSURANCE AND JOB SEARCH DECISIONS: COMMENT. Rosen, Sherwin // Industrial & Labor Relations Review;Jul77, Vol. 30 Issue 4, p518 

    The article comments on a research on unemployment insurance and job search decisions. The research is considered as a generalization of optimal job search in which three separate U.S. states are distinguished. It is noted that the essential point raised in the study is that workers who are not...

  • The Impact of Unemployment Insurance on the Job Match Quality: A Quantile Regression Approach. Centeno, Mário; Novo, Álvaro // Empirical Economics;Nov2006, Vol. 31 Issue 4, p905 

    This paper investigates the impact of unemployment insurance (UI) generosity on the distribution of the match starting wage and tenure. We show evidence of a positive shift in the location (mean) and scale (variance) of both variables: more generous UI increases expected starting wage and...

  • Unemployment Insurance, Job Queues, and Systematic Job Search: An Equilibrium Approach. Khan, Lawrence M. // Southern Economic Journal;Oct87, Vol. 54 Issue 2, p397 

    The focus of this paper is to model the UI system's impact on the firm's wage-queue policy. We start with the effect of UI on the unemployed worker's sectoral labor supply decision, which is derived in a wealth-maximizing model of job search.[3] The systematic search approach, which assumes that...

  • Estimating the Effect of Counseling and Monitoring the Unemployed Using a Job Search Model. Gorter, Cees; Kalb, Guyonne R. J. // Journal of Human Resources;Summer96, Vol. 31 Issue 3, p590 

    This paper examines the impact of the Counseling and Monitoring program for the unemployed with particular reference to their job finding rate. application intensity, and marching probability. The effectiveness of counseling and Monitoring is measured by using a job search model in which the job...

  • Seeking competing offer to gain pay hike raises ethical questions. O'Donnell, Jeanine "J.T."; Dauten, Dale // Monroe County Clarion;7/20/2011, Vol. 51 Issue 31, pF5 

    The article presents answers to employment-related letters sent in by readers including one on the propriety of searching for a competing offer in requesting for a raise and one on the abuse in the collection of unemployment benefits by certain groups.

  • Feedback proves vital, but should not be reserved for annual review. O'Donnell, Jeanine; Dauten, Dale // South County Journal;11/30/2011, Vol. 56 Issue 48, pD12 

    The article presents questions and answers related to employment in the U.S. including ones about annual job review and employment options for a man who failed to obtain unemployment insurance.


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics