The Effect of Unemployment Insurance on Temporary Layoff Unemployment

摘要: Economists are now beginning to recognize that an understanding of temporary layoffs is crucial for a proper analysis unemployment. In manufacturing, about 75 percent those who laid off return their original employers. More generally, among all persons classified as "unemployed job losers," account 50 unemployment spells. Temporary even larger fraction cyclical changes in the number losers. While this group includes some seasonally unemployed, most induced by short random or fluctuations demand. The conventional model search inappropriate on layoff and modern theory Phillips curve requires substantial modification because size variation I previous paper (1976), showed analytically our current system insurance (UI) provides incentive increased unemployment.2 present micro-economic evidence UI actually has such powerful effect. estimates imply provided average level benefits responsible approximately one-half It important note study shows increases amount unemployment, but does not deal with mean duration per spell. This distinction deserves emphasis nearly empirical work focused potential effect duration. focus both unfortunate surprising since can increase total while decreasing any given spell it may also induce more very spells possibility reduced clear my 1976 theoretical analysis. An additional practical *Professor economics, Harvard University. am grateful National Science Foundation support research, David Ellwood Joseph Kahan assistance statistical calculations, Richard Freeman, Zvi Griliches, Daniel Hamermesh, James Medoff, Melvin Reder, Jeffrey Sachs discussions comments. Earlier versions were presented at seminars Chicago, Harvard, Yale universities. IIn 1975 paper, pp. 737-42, discuss implications curve, wage inflexibility. Although standard criterion active seeking within past four weeks, individuals officially unemployed without inquiry recent job-seeking activity if they state "on awaiting recall employers." Some look jobs alternative permanent employment, vast majority do Readers should be confused two quite separate meanings term "layoff" Department Labor's lexicon. manufacturing establishment data, separation initiated employer (not quit) temporary. Current Population Survey (CPS), individual he working "has job" which expecting recalled his employer. To emphasize dealing expected terminate recall, use adjective "temporary." Unfortunately, CPS uses word different confusing way: divided into "indefinite duration" (in have date thirty days) "temporary" (when known). When useful distinguish these groups, terms "fixed duration"; usage, groups. 2My really explicit proof arguments made informally earlier Joint Economic Committee (1973). For similar development, see Martin Baily.