Re-employment probabilities of unemployment benefit recipients

Abstract

This article studies transitions out of unemployment for benefit recipients in Spain. We analyse the duration of unemployment, distinguishing between spells that end in recall (workers returning to the previous employer) and spells that end in exit to a new job. This distinction allows us to find that the recall hazard rate increases around the time of exhaustion of benefits. However, this happens only for workers receiving Unemployment Insurance (UI). Because we are unable to replicate this result for workers receiving Unemployment Assistance (UA), we believe the finding lends support to the hypothesis that in Spain firms and workers make a strategic use of UI.

Unemployment Transitions to Stable and Unstable Jobs Before and During the Crisis

“…As expected, an unemployed person in a region with a high unemployment rate has a smaller probability of receiving a job offer and therefore a longer unemployment spell than a similar person in a region with a low unemployment rate. This is consistent with other findings for Spain like Arranz and Muro (2004), Alba et al (2012), Arranz et al (2010) and Bover, Arellano and Bentolila (2002).…”

“…An exit to any job is 30% more likely for a man than for an otherwise similar woman during the expansion period, and only 17% in the recession. Similar results are found by Arranz and Muro (2004), Arranz et al (2010) and in Alba et al (2012) for exits to new jobs (not recalls). The estimates distinguishing exits to stable and unstable jobs show that before the crisis, the gender difference was much larger for unstable than for stable jobs.…”

“…Moreover, unemployment spells could be shorter in large firms because of the larger effectiveness of workers' representatives (Jimeno and Toharia, 1993). Alba et al (2012) also found that the unemployed from larger firms have higher hazard rates, both for recalls and for new jobs. During the crisis, the size effects increase, perhaps because the probability of recall grows mostly for larger companies.…”

“…The work interruptions are covered either working in a different industry or by receiving unemployment benefits (Alba et al, 2012). Thus, the economic nature of open-ended contracts leads to more job rotation.…”

New Job Matches and Their Stability Before and During the Crisis

“…Previous evidence on this is mixed: García- with consecutive employment spells and unemployment benefit spells (Alba et al, 2012). In the downturn this seems to be less relevant.…”