Cite JOURNAL ARTICLE
Unemployment Insurance and the Stability of Earnings: A Comparison of Work Exits from Unemployment in the United States and West Germany
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 123 (2003), Iss. 1 : pp. 83–94
Viewing unemployment insurance (UI) as a search subsidy to workers, job search models predict that unemployment benefits improve job outcomes for unemployed workers. Based on 1984 – 1995 data from the U.S. Survey of Income and Program Participation and the German Socio-Economic Panel, the paper reports earnings regression estimates for an inflow sample of displaced workers. Consistent with the search model, the analysis shows positive effects of unemployment benefit coverage on workers’ subsequent earnings in both countries. UI effects are particularly strong in the lower tails of the earnings change distribution, particularly for West German workers.