Unemployment Duration, Benefit Duration and the Business Cycle

43 Pages Posted: 22 Dec 2002

See all articles by Olympia Bover

Olympia Bover

Banco de España - Research Department; Centre for Economic Policy Research (CEPR)

Manuel Arellano

CEMFI

Samuel Bentolila

Centro de Estudios Monetarios y Financieros (CEMFI); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

In this paper we study the effects of unemployment benefit duration and the business cycle on unemployment duration. We construct durations for individuals entering unemployment from a longitudinal sample of Spanish men in 1987-94. Estimated discrete hazard models indicate that receipt of unemployment benefits significantly reduces the hazard of leaving unemployment. At durations of three months, when the largest effects occur, the hazard for workers without benefits is twice as large as that for workers with benefits. Favourable business conditions increase the hazard of leaving unemployment. At sample-period magnitudes, this effect is significantly smaller than that of benefit receipt.

Suggested Citation

Bover, Olympia and Arellano, Manuel and Bentolila, Samuel, Unemployment Duration, Benefit Duration and the Business Cycle. Economic Journal, Vol. 112, pp. 223-265, 2002. Available at SSRN: https://ssrn.com/abstract=313273

Olympia Bover (Contact Author)

Banco de España - Research Department ( email )

Alcala 50
28014 Madrid
Spain
+34 91 338 5979 (Phone)
+34 91 338 5678 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Manuel Arellano

CEMFI ( email )

Casado del Alisal 5
28014 Madrid
Spain
+34 91 429 0551 (Phone)
+34 91 429 1056 (Fax)

Samuel Bentolila

Centro de Estudios Monetarios y Financieros (CEMFI) ( email )

Casado del Alisal 5
28014 Madrid
Spain
+34 91 429 0551 (Phone)
+34 91 429 1056 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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