IS UNEMPLOYMENT-INSURANCE ADDICTIVE - EVIDENCE FROM THE BENEFIT DURATIONS OF REPEAT USERS

The author finds evidence that the past occurrence of a spell of insured unemployment lengthens the duration of future spells. Descriptive statistics from Canadian administrative data covering mid-1971 to early 1990 suggest that unemployment insurance (UI) claimants tend to spend a longer and longer time collecting benefits with each additional claim they make. This finding contradicts the implication of static neoclassical models that successive UI spells should be of the same length. The author hypothesizes that the stigma attached to receiving unemployment benefits erodes with each new UI claim an individual files.