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Unemployment Insurance and Job Quits

Author

Listed:
  • Audrey Light

    (Ohio State University)

  • Yoshiaki Omori

    (Otaru University of Commerce, Japan)

Abstract

We investigate an unexplored avenue through which unemployment insurance increases unemployment. As unemployment insurance benefits rise, workers lose incentive to "preempt" impending layoffs by changing jobs. We formalize this prediction in a job search model and investigate it empirically by estimating a proportional hazard model with data from the 1979 National Longitudinal Survey of Youth, using state- and year-specific algorithms to compute each worker's expected unemployment insurance benefits. Our estimates reveal that an exogenous increase in benefits deters job quits by a small but statistically significant amount.

Suggested Citation

  • Audrey Light & Yoshiaki Omori, 2004. "Unemployment Insurance and Job Quits," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 159-188, January.
    • Handle: RePEc:ucp:jlabec:v:22:y:2004:i:1:p:159-188
    DOI: 10.1086/380406
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    References listed on IDEAS

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    2. Gutierrez, Italo A., 2016. "Job insecurity, unemployment insurance and on-the-job search. Evidence from older American workers," Labour Economics, Elsevier, vol. 41(C), pages 228-245.
    3. Garcia-Louzao, Jose, 2022. "Workers’ job mobility in response to severance pay generosity," Labour Economics, Elsevier, vol. 75(C).
    4. Albanese, Andrea & Picchio, Matteo & Ghirelli, Corinna, 2020. "Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs?," Labour Economics, Elsevier, vol. 65(C).
    5. Goensch, Johannes & Gulyas, Andreas & Kospentaris, Ioannis, 2024. "Worker mobility and UI extensions," European Economic Review, Elsevier, vol. 162(C).
    6. Root, Andrew & Yung, Kenneth, 2022. "Resolving agency and product market views of cash holdings," Research in International Business and Finance, Elsevier, vol. 59(C).
    7. Gordon B. Dahl & Matthew M. Knepper, 2021. "Why is Workplace Sexual Harassment Underreported? The Value of Outside Options Amid the Threat of Retaliation," NBER Working Papers 29248, National Bureau of Economic Research, Inc.
    8. Gao, Mingze & Leung, Henry & Qiu, Buhui, 2021. "Organization capital and executive performance incentives," Journal of Banking & Finance, Elsevier, vol. 123(C).
    9. D. G. C. Britto, 2016. "Unemployment Insurance and the Duration of Employment: Evidence from a Regression Kink Design," Working Papers wp1058, Dipartimento Scienze Economiche, Universita' di Bologna.
    10. Parolin, Zachary & Pignatti, Clemente, 2024. "Optimal Unemployment Insurance with Program Interactions," IZA Discussion Papers 17095, Institute of Labor Economics (IZA).
    11. Kyyrä, Tomi & Pesola, Hanna & Rissanen, Aarne, 2017. "Unemployment Insurance in Finland: A Review of Recent Changes and Empirical Evidence on Behavioral Responses," Research Reports 184, VATT Institute for Economic Research.
    12. Kelly D. Edmiston, 2006. "Workers’ Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145, February.
    13. Diogo Britto, 2016. "Unemployment Insurance and the Duration of Employment: Theory and Evidence from a Regression Kink Design," DISCE - Working Papers del Dipartimento di Economia e Finanza def048, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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