Hostname: page-component-586b7cd67f-2plfb Total loading time: 0 Render date: 2024-11-24T02:51:33.414Z Has data issue: false hasContentIssue false
  • English
  • Français

JOB DURATION AND HISTORY-DEPENDENT UNEMPLOYMENT INSURANCE

Published online by Cambridge University Press:  17 December 2020

Torben M. Andersen  and
Christian Ellermann-Aarslev
Torben M. Andersen*
Affiliation:
Aarhus University, CEPR, CESifo and IZA
Christian Ellermann-Aarslev
Affiliation:
Aarhus University and Danmarks Nationalbank
*
Address correspondence to: Department of Economics and Business Economics, Aarhus University, Fuglesangs Allé 4, DK-8210 Aarhus V., Denmark. e-mail: [email protected]. Phone: +45 8716 5557.
Get access Rights & Permissions [Opens in a new window]

Abstract

Unemployment insurance schemes typically include eligibility conditions comprising the employment history prior to becoming unemployed, an aspect largely neglected in the literature. We develop an analytically tractable matching model including such contingencies. Unemployed determine reservation durations for jobs to be acceptable, and stronger employment histories increase reservation durations. This creates a stratification among unemployed; unemployed with short employment histories accept short-term jobs, while those with a strong employment history aims for jobs with a longer duration. A trade-off arises between the employment level and the matching quality in terms of job duration; a stronger reward to employment histories reduces employment, but improves match quality (more long-term jobs). Numerical simulations show that the distribution between short- and long-term jobs is significantly affected by history dependencies in benefits levels and duration. The optimal utilitarian policy is shown to include contingencies based on employment histories of the unemployed.

Keywords

Unemployment InsuranceEntitlement ConditionsEmployment HistoryJob Search
Type
Articles
Information
Macroeconomic Dynamics , Volume 26 , Issue 6 , September 2022 , pp. 1444 - 1482
Copyright
© Cambridge University Press 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The viewpoints and conclusions stated are the responsibility of the authors and do not necessarily reflect the views of Danmarks Nationalbank. We gratefully acknowledge constructive comments from Rune Vejlin, Birthe Larsen, Ann-Sofie Kolm, and referees and an associate editor.

References

REFERENCES

Andersen, T. M., Kristoffersen, M. S. and Svarer, M. (2018) Benefit reentitlement conditions in unemployment insurance schemes. Labour Economics 52, 27–39.CrossRefGoogle Scholar
Dagpengekommissionen (2015a) Dagpengekommissionens hovedrapport. København.Google Scholar
Dagpengekommissionen (2015b) Kompensationsgraden i dagpengesystemet. Arbejdspapir fra Dagpengekommissionen, p. 36. København.Google Scholar
Ellermann-Aarslev, C. (2017a) General equilibrium effects of entitlement conditions in unemployment insurance. Working Paper, Aarhus University.Google Scholar
Ellermann-Aarslev, C. (2017b) Job search responses to entitlement conditions in unemployment insurance. Working Paper, Aarhus University.Google Scholar
Faig, M. and Zhang, M. (2012) Labor market cycles, unemployment insurance eligibility, and moral hazard. Review of Economic Dynamics 15(1), 41–56.Google Scholar
Fredriksson, P. and Holmlund, B. (2001) Optimal unemployment insurance in search equilibrium. Journal of Labor Economics 19(2), 370–399.CrossRefGoogle Scholar
Fredriksson, P. and Holmlund, B. (2006) Improving incentives in unemployment insurance: A review of recent research. Journal of Economic Surveys 20(3), 357–386.CrossRefGoogle Scholar
Hopenhayn, H. A. and Nicolini, J. P. (2009) Optimal unemployment insurance and employment history. The Review of Economic Studies 76(3), 1049–1070.CrossRefGoogle Scholar
Horstein, A., Krusell, P. and Violante, G. L. (2011) Frictional wage dispersion in search models: A quantitative assessment. American Economic Review 101, 2873–2898 CrossRefGoogle Scholar
Jovanovic, B. (1979) Job matching and the theory of turnover. Journal of Political Economy 87(5), 972–990.CrossRefGoogle Scholar
Mortensen, D. T. (1977) Unemployment insurance and job search decisions. Industrial and Labor Relations Review 30(4), 505–517.CrossRefGoogle Scholar
OECD (2016) OECD Economic Surveys: Denmark 2016. Paris.Google Scholar
Ortega, J. and Rioux, L. (2010) On the extent of re-entitlement effects in unemployment compensation. Labour Economics 17(2), 368–382.CrossRefGoogle Scholar
Ortego-Marti, V. (2017). The Cyclical Behavior of unemployment and vacancies with loss of skills during unemplyment. Macroeconomic Dynamics 21(6), 1277–1304.CrossRefGoogle Scholar
Tatsiramos, K. and van Ours, J. C. (2014) Labor market effects of unemployment insurance design. Journal of Economic Surveys 28(2), 284–311.CrossRefGoogle Scholar
Thimme, J. (2017) Intertemporal substitution in consumption: A litereture review. Journal of Economic Surveys 31(1), 226–257.CrossRefGoogle Scholar
Venn, D. (2012) Eligibility criteria for unemployment benefits: Quantitative indicators for OECD and EU countries, OECD Social, Employment and Migration Working Papers, 131, Paris.Google Scholar