Unemployment Insurance, Recall Expectations, and Unemployment Outcomes

59 Pages Posted: 5 Jul 2004 Last revised: 4 Apr 2015

See all articles by Lawrence F. Katz

Lawrence F. Katz

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Bruce D. Meyer

University of Chicago - Harris Public Policy; National Bureau of Economic Research (NBER)

Date Written: May 1988

Abstract

This paper shows the importance of explicitly accounting for the possibility of recalls when analyzing the determinants of unemployment spell durations and the effects of unemployment insurance (UI) on unemployment outcomes in the United States. These issues are examined using a unique sample of UI recipients from Missouri and Pennsylvania covering unemployment spells in the 1979- 1981 period. We find that those expecting recall who are not recalled tend to have quite long unemployment spells. Furthermore, ex-ante temporary layoff spells (the spells of individuals' who initially expect to be recalled) may account for over 60 percent of the unemployment of UI recipients and appear to account for much more unemployment than ex-post temporary layoff spells (spells actually ending in recall). We estimate a competing risks model in which the finding of a new job and recall are treated as alternate routes of leaving unemployment. Our results using this approach show that the recall and new job exit probabilities have quite different time patterns and are often affected in opposite ways by explanatory variables. We also find that the probability of leaving unemployment (both through recalls and new job finding) increases greatly around the time that UI benefits lapse.

Suggested Citation

Katz, Lawrence F. and Meyer, Bruce D., Unemployment Insurance, Recall Expectations, and Unemployment Outcomes (May 1988). NBER Working Paper No. w2594. Available at SSRN: https://ssrn.com/abstract=428343

Lawrence F. Katz (Contact Author)

Harvard University - Department of Economics ( email )

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Bruce D. Meyer

University of Chicago - Harris Public Policy ( email )

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National Bureau of Economic Research (NBER)

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