Effects of Changes in the Unemployment Insurance Eligibility Requirements on Job Duration —

This paper investigates the impact of the unemployment insurance (UI) entrance requirement on employment duration in Sweden. I study employment spells in 1992, 1996, and 1998 to find behavioural adjustments in the timing of job separation. The results suggest that some adjustments have occurred. Comparisons between years with different UI requirements support the conclusion. By using predicted hazard rates for each week, I calculate an approximate 3-week extension in the average duration of employment spells between 1996 and 1998. JEL classification: J22, J65, J68 * Stockholm University and Swedish Labour Market Board (AMS), 113 99 Stockholm, Sweden. E-mail: [email protected]. ** I am grateful to Anders Björklund, Lena Granqvist and Lars Behrenz for valuable comments and to the Office of Labour Market Policy Evaluation (IFAU) in Uppsala for financing the project. I especially thank Fredrik Jansson who has been of invaluable help throughout the entire research process. Finally, I appreciate comments from seminar participants at IFAU, Swedish Institute for Social Research, Stockholm University, and the Swedish Labour Market Board (AMS).