Similan Rujiwattanapong, Aarhus University (Job Market Seminar)

“Unemployment Dynamics and Endogenous Unemployment Insurance Extensions”

Abstract

This paper investigates the impact of endogenous unemployment insurance (UI) extensions on the dynamics of unemployment and its duration structure in the US. Using a search and matching model with worker heterogeneity, I allow for the maximum UI duration to depend on unemployment and for UI benefits to depend on worker characteristics. UI extensions have a large effect on unemployment duration during the Great Recession via job search responses and a moderate effect on total unemployment via job separations. Disregarding rational expectations about the timing of UI extensions could imply an overestimation of the unemployment rate by over 2 percentage points.

Contact person: Emiliano Santoro