How unemployment benefits affect individuals of different wealth classes

Lorenzo Corsini

International Journal of Manpower, 2013, vol. 34, issue 6, 693-711

Abstract: Purpose - This paper investigates whether the effect of unemployment benefits (UB) on unemployment duration is the same for individuals belonging to different wealth groups. Design/methodology/approach - Using a sample of newly unemployed individuals from Italy in 2007, we perform estimations of semi‐parametric and parametric Cox hazard models and finds a significant interaction between benefits and wealth. Findings - In particular, we show that the mitigating effect of benefits on liquidity constraints is less marked for individuals from richer households and therefore, for these individuals, benefits do not increase unemployment duration. Originality/value - The results also show that liquidity constraints are important in determining unemployment duration and that wealth has an important role in the actual effect of UB.

Keywords: Duration models; Household wealth; Unemployment duration; Unemployment insurance (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:v:34:y:2013:i:6:p:693-711

DOI: 10.1108/IJM-10-2012-0153

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