Unemployment Insurance and Underemployment

22 Pages Posted: 5 May 2016  

Anna Godøy

Institute for Social Research, Norway

Knut Roed

Ragnar Frisch Centre for Economic Research; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 2016

Abstract

Should unemployment insurance (UI) systems provide coverage for underemployed job seekers? Based on a statistical analysis of Norwegian unemployment spells, we conclude that the answer to this question is yes. Allowing insured job seekers to retain partial UI benefits during periods of insufficient part‐time work not only reduces UI expenditures during the part‐time work period, but it also unambiguously reduces the time until a regular self‐supporting job is found. Probable explanations are that even small temporary part‐time jobs provide access to useful vacancy information and that such jobs are used by employers as a screening device when hiring from the unemployment pool.

JEL Classification: C41, J65

Suggested Citation

Godøy, Anna and Roed, Knut, Unemployment Insurance and Underemployment (June 2016). LABOUR, Vol. 30, Issue 2, pp. 158-179, 2016. Available at SSRN: https://ssrn.com/abstract=2775474 or http://dx.doi.org/10.1111/labr.12066

Anna Godøy (Contact Author)

Institute for Social Research, Norway ( email )

Munthesgate 31
0260 Oslo
Norway

Knut Røed

Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0349 Oslo
Norway

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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