PERSONAL CHARACTERISTICS, UNEMPLOYMENT-INSURANCE, AND THE DURATION OF UNEMPLOYMENT

This paper develops a methodology to accomodate the 'spikes' in reemployment probabilities that are observed when unemployment insurance expires. Previous studies apply the Cox regression model, which has the advantage of a nonparametric baseline hazard function. However, even the Cox model constrains the explanatory variables to have the same effect throughout the entire spell of unemployment. By contrast, our new model allows the explanatory variables to have different effects at and away from the spike. After a simple data transformation, our model may be estimated using readily available software. An empirical example is provided and generalizations are discussed. © 1990.