Unemployment benefits and recall jobs: a split population model

ABSTRACT

We study the transitions out of unemployment of the recipients of insurance benefits, focusing on whether or not they are recalled to their previous employment. Specifically, a split population duration model (SPDM) for the recall decision by employers is compared with a standard duration model (SDM). We find significant differences between the SPDM and the SDM estimates, both with regard to their magnitude and expected sign. Some of the variables record undervalued estimated hazard rates in the SDM with respect to the SPDM.

KEYWORDS:

• Unemployment insurance
• recall jobs
• split population models
• duration analysis

JEL CLASSIFICATION:

• C41
• C54
• J64
• J65

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This study has been supported by financial aid from the Ministry of Economy and Competitiveness of Spain (Project ECO2012-3616) and Ramon Areces Foundation (Madrid, Spain).