Unemployment Benefits and Search Effort in the UK Labour Market

Abstract

In this paper, the impact that receipt of unemployment benefit has on job-search effort is investigated. Utilizing data drawn from the 1984 Labor Force Survey, reduced-form search-effort equations are estimated conditional on the decision to seek work. After controlling for potential selectivity bias, personal characteristics, and demand conditions, those claiming benefit are shown to search more extensively than nonclaimants. Benefit claimants maintain a clear attachement to the labor market and appear more able to prolong search effort. Receipt of unemployment benefit increases the likelihood of contacting a job vacancy. Copyright 1991 by The London School of Economics and Political Science.