Long-term Unemployment Dynamics and Unemployment Insurance Extensions

会場: 東京大学経済学研究科学術交流棟(小島ホール)
     1階 第1セミナー室

報告: Similan Rujiwattanapong氏
   (Aarhus University講師)

This paper investigates the impact of unemployment insurance (UI) extensions on the incidence of long-term unemployment and on the unemployment duration distribution in the US. Using a search and matching model with endogenous separations, variable job search intensity, on-the-job search and worker heterogeneity, I allow for the maximum UI duration to depend on unemployment rate and for UI benefits to depend on match quality during employment. The model can account for a large fraction of the observed rise in the long-term unemployment and realistic dynamics of the unemployment duration distribution during the Great Recession. I show that eliminating all UI extensions (64-week reduction) during the Great Recession could potentially lower the unemployment rate by 0.9-3.4 percentage points primarily via the response of job separations. At the same time, it could drastically reduce the long-term unemployment rate by roughly 4 percentage points and the average unemployment duration by up to 27 weeks via the response of job search behaviour of insured unemployed workers. I find that once the worker heterogeneity in UI statuses and benefit levels has been accounted for, unobserved heterogeneity of workers has a small role for explaining the incidence of long-term unemployment. To make the model empirically consistent, I introduce a drop in job search efficiency amongst insured unemployed workers. This feature increases the persistence of total unemployment, average unemployment duration and long-term unemployment, and, at the same time, moderate the UI effects on the last two variables.

Similan Rujiwattanapong is an assistant professor in economics at Aarhus University in Denmark. He is also a research affiliate at the Dale T. Mortensen Centre, and a member of Centre for Macroeconomics. He holds a PhD in economics from University College London in the UK. His research focuses on unemployment dynamics, labour market policies, and the business cycles. He approaches this research topic by basing on theoretical foundations, and using varied data and computational tools to answer questions that are relevant from both academic and policy standpoints.

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