Worker mobility and UI extensions

Johannes Goensch, Andreas Gulyas and Ioannis Kospentaris

European Economic Review, 2024, vol. 162, issue C

Abstract: We develop an equilibrium search model with a labor force participation decision, job-to-job transitions, and endogenous separations. The calibrated model perfectly matches the observed labor market flows in US data. We use the model to simulate the effects of an extension of unemployment insurance benefits to 99 weeks. The reform leads to a decrease in employment, an increase in the labor force participation and unemployment rate, while it leaves labor productivity roughly constant. Using a model-based decomposition, as well as comparisons with alternative simplified models, we show that modeling workers’ participation decisions, job-to-job transitions, and endogenous separations together is crucial for a complete and accurate analysis of UI reforms.

Keywords: Labor market flows; Directed search; Unemployment insurance (search for similar items in EconPapers)
JEL-codes: E24 J63 J64 J65 J68 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:162:y:2024:i:c:s0014292124000011

DOI: 10.1016/j.euroecorev.2024.104672

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