Cover: The Effect of the UI Wage Replacement Rate on Reemployment Wages

The Effect of the UI Wage Replacement Rate on Reemployment Wages

A Dynamic Discrete Time Hazard Model with Unobserved Heterogeneity

Published Jan 8, 2010

by Zafar Nazarov

Download eBook for Free

FormatFile SizeNotes
PDF file 0.2 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

This study estimates the effect of the UI (Unemployment Insurance) wage replacement rate on reemployment wages using the sample of men in the 1996 and 2001 Surveys of Income and Program Participation. It models employment search behavior in a dynamic discrete time hazard setting with three possible outcomes: finding a full-time job, finding a part-time job, or staying unemployed (continuing the job search). It finds that reemployment wages, particularly part-time wages, decrease with the UI wage replacement rate. Furthermore, the wage replacement rate depresses the prospect of finding full-time work while increasing the prospect of finding part-time work.

This paper series was made possible by the NIA funded RAND Center for the Study of Aging and the NICHD funded RAND Population Research Center.

This report is part of the RAND working paper series. RAND working papers are intended to share researchers' latest findings and to solicit informal peer review. They have been approved for circulation by RAND but may not have been formally edited or peer reviewed.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.