ERIC Number: ED317683
Record Type: RIE
Publication Date: 1989-Sep
Unemployment Insurance: The Worker's Perspective. Background Paper No. 16.
Cox, James C.; Oaxaca, Ronald L.
Regardless of the techniques, model specifications, time periods, and data sets used, studies on the effects of unemployment insurance (UI) benefits on the duration of unemployment of individuals all indicate that UI prolongs spells of unemployment and lowers employment among its recipients. Unfortunately, the magnitudes of these estimated effects vary more than one would like. The single best estimate is that a 20 percent rise in weekly benefit amount for a UI claimant with a wage replacement ratio of 0.5 would increase the duration of his or her spell of unemployment by about a week. Another source of work disincentives is the maximum potential duration of UI benefits. Given the range of estimates in the literature, a best guess is that an additional week of duration increases a spell of unemployment by no more than 0.5 weeks. The evidence thus far shows that benefits extended beyond the exhaustion of regular UI benefits has very small negative effects on employment. One can find no compelling evidence in support of the proposition that UI increases wages by providing time for better job matches to be made and that, therefore, UI increases job stability. However, those effects may exist. They may simply have not been measured yet, due to significant data problems. Virtually all the studies on the effects of UI are limited in that they are not experimental. Future studies should include examination of the effects of UI on post-unemployment earnings, on the quality of post-unemployment job matches, and on job search intensity. (The document contains 24 references.) (CML)
Publication Type: Information Analyses
Education Level: N/A
Sponsor: Department of Labor, Washington, DC. Commission on Workforce Quality and Labor Market Efficiency.
Authoring Institution: N/A
Note: In "Investing in People: A Strategy to Address America's Workforce Crisis" (CE 054 080).