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The effect of unemployment insurance on unemployment rate and average duration: evidence from pooled cross-sectional time-series data

Author

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  • Phanindra Wunnava
  • Syed Ali Raza Mehdi

Abstract

This paper empirically analyses the impact of the unemployment insurance system upon the insured unemployment rate and the average duration of unemployment. It employs a simultaneous equation framework because of possible feedback effects between the insured unemployment rate and the average duration of unemployment. Based on a pooled crosssectional time-series model (covering all the 50 states in the USA for the years 1967-88) that corrects for heteroscedasticity and autocorrelation, and the results show some support for the hypothesis that the unemployment insurance system, by providing workers with a safety net, increases both the insured unemployment rate and the duration period.

Suggested Citation

  • Phanindra Wunnava & Syed Ali Raza Mehdi, 1994. "The effect of unemployment insurance on unemployment rate and average duration: evidence from pooled cross-sectional time-series data," Applied Economics Letters, Taylor & Francis Journals, vol. 1(7), pages 114-118.
    • Handle: RePEc:taf:apeclt:v:1:y:1994:i:7:p:114-118
    DOI: 10.1080/135048594358104
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    Cited by:

    1. Carl Davidson & Stephen A. Woodbury, 1996. "Unemployment Insurance and Unemployment Implications of the Reemployment Bonus Experiments," Book chapters authored by Upjohn Institute researchers, in: Advisory Council on Unemployment Compensation: Background Papers, volume 3, pages KK1-KK37, W.E. Upjohn Institute for Employment Research.
    2. Pilar Olave & Eva Maria Andres & Jose Tomas Alcala, 2008. "Studying the relationship between unemployment periods in Spain: a nonparametric approach," Applied Economics Letters, Taylor & Francis Journals, vol. 15(9), pages 683-687.

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