Unemployment Insurance, Filing Delay, and Unemployment Duration

Abstract

Higher weekly benefit amounts and longer potential benefit duration are thought to encourage some unemployment insurance (UI) beneficiaries to remain unemployed longer. Much of the empirical evidence of this effect has involved a positive relationship between benefit liberality and the number of weeks that recipients collect benefits. But several analysts have argued that weeks of compensated unemployment may be a misleading measure of unemployment duration because many beneficiaries are unemployed for some time before they file for benefits. In particular, if higher benefit levels induce unemployed workers to file for benefits more promptly, then benefit level will be positively associated with compensated unemployment duration even if it has no effect on tgt§l_unemployment duration. This study uses new data from the Continuous Wage and Benefit History program to replicate previous work on the relationship between benefit liberality and compensated duration, and then tests whether the results are biased by the failure to measure pre-filing unemployment. The analysis yields the familiar finding that higher benefits and longer potential benefit duration are associated with longer compensated duration. The data do not support the hypothesis that compensated- duration studies overestimate UI effects because of a relationship between benefit level and filing delay.