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Unemployment benefits and labour market transitions in Britain

Wadsworth, Jonathan (1992) Unemployment benefits and labour market transitions in Britain. CEP discussion paper, 73. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

Recent evidence suggests that unemployment benefit recipients search more extensively than non-recipients. It is conceivable that benefit claimants, looking for work in a more formal search environment, enjoy an informational advantage relative to non-claimants. This paper examines how such an effect could influence the probability of leaving unemployment, utilising data drawn from a matched sub-sample of the 1983 and 1984 Labour Force Surveys. Studies which neglect the claimant/non-claimant dichotomy may bias the true impact of the benefit system on transitions, since they also neglect this informational asymmetry. Utilising a general Markovian framework, multinomial logistic regressions of individual annual transition probabilities from unemployment into employment and inactivity are estimated. Benefit receipt has a small positive influence on the likelihood of employment entry amongst those most at risk from labour force exit- women and the long-term unemployed. The main benefit impact however, is to maintain a higher effective labour supply.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 1992 Jonathan Wadsworth
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 73
Date Deposited: 21 Aug 2008 09:15
URL: http://eprints.lse.ac.uk/21054/

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