Unemployment Insurance and Job Search Behavior

67 Pages Posted: 3 Jan 2019 Last revised: 17 Dec 2019

See all articles by Ioana Elena Marinescu

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice; National Bureau of Economic Research (NBER)

Daphné Skandalis

Federal Reserve Banks - Federal Reserve Bank of New York

Date Written: November 18, 2019

Abstract

Unemployment insurance (UI) helps workers smooth their consumption at job loss but can also affect their job search behavior due to moral hazard. We shed light on the effect of UI on job search behavior using new longitudinal data: we track job applications sent on a major online search platform for 500,000 French unemployed workers. We show that, in the year before their benefits exhaustion, unemployed workers increase their search intensity by 50% and decrease their target wage by 3.5%. After exhaustion, they keep a relatively high search intensity and low target wage. Prior evidence seemingly inconsistent with these findings can largely be explained by dynamic selection and duration dependence. Our structural estimation shows that the standard search model fits our reduced-form estimates very well. The behavioral reference-dependent search model provides an even better fit, but with a small degree of reference-dependence that only slightly affects search behavior. Overall, our findings suggest that the standard search model provides a good approximation of the dynamic impact of UI on search behavior.

Suggested Citation

Marinescu, Ioana Elena and Skandalis, Daphné, Unemployment Insurance and Job Search Behavior (November 18, 2019). Available at SSRN: https://ssrn.com/abstract=3303367 or http://dx.doi.org/10.2139/ssrn.3303367

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice ( email )

3701 Locust Walk
Philadelphia, PA 19104-6214
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Daphné Skandalis (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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