Why is there a spike in the job finding rate at benefit exhaustion?

Jan C. van Ours and Jan Boone

No 7525, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Putting a limit on the duration of unemployment benefits tends to introduce a "spike" in the job finding rate shortly before benefits are exhausted. Current theories explain this spike from workers' behavior. We present a theoretical model in which also the nature of the job matters. End-of-benefit spikes in job finding rates are related to optimizing behavior of unemployed workers who rationally assume that employers will accept delays in the starting date of a new job, especially if these jobs are permanent. We use a dataset on Slovenian unemployment spells to test this prediction and find supporting evidence. We conclude that the spike in the job finding rate suggests that workers exploit unemployment insurance benefits for subsidized leisure.

Keywords: Spikes; Unemployment (search for similar items in EconPapers)
JEL-codes: I31 J16 J22 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (18)

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Related works:
Journal Article: Why is There a Spike in the Job Finding Rate at Benefit Exhaustion? (2012)
Working Paper: Why is there a Spike in the Job Finding Rate at Benefit Exhaustion? (2009)
Working Paper: Why Is There a Spike in the Job Finding Rate at Benefit Exhaustion? (2009)
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