Unemployment Insurance and Job Search Behavior
59 Pages Posted: 3 Jan 2019 Last revised: 17 Feb 2019
Date Written: February 15, 2019
Why do longer unemployment benefits cause longer unemployment spells? We document the time path of search behavior for 500,000 French unemployed workers entitled to various benefit durations. Search effort and the job finding hazard increase by 60% just before benefit exhaustion and decrease symmetrically after. Target wages decrease by 0.1% every month until benefit exhaustion, then remain constant. While standard search models cannot explain the drop in search effort after benefit exhaus- tion, our results confirm that search behavior is a key determinant of unemployment duration. Overall, longer benefits delay job finding mostly by postponing a spike in search effort.
Suggested Citation: Suggested Citation