It is well known that unemployment benefits raise unemployment durations. This result has traditionally been … interpreted as a substitution effect caused by a distortion in the price of leisure relative to consumption, leading to moral … hazard. This paper questions this interpretation by showing that unemployment benefits can also affect durations through an …

It is well known that unemployment benefits raise unemployment durations. This result has traditionally been … interpreted as a substitution effect caused by a distortion in the price of leisure relative to consumption, leading to moral … hazard. This paper questions this interpretation by showing that unemployment benefits can also affect durations through an …

consumption goods, one of which involves a commitment in that an adjustment cost must be paid when the good is sold. In this model … is imputed using existing labor supply elasticities, and variations in unemployment insurance laws are used to estimate …