The Relative Effects of Unemployment Insurance Parameters on Transitional Labor Supply Decisions

The paper examines the role unemployment insurance (UI) parameters play in transitional labor supply decisions of individuals searching for a job. This paper compares the impact of UI parameters to the impact of other demographic variables. It also compares the relative strength of the parameters to one another. A sequential ordered response model is specified to focus on the transitional employment decisions of searchers who are receiving UI. The results suggest that the tax rate is a viable policy tool for influencing labor supply during the job search process, and states may even experience a net savings through its decrease.