Unemployment Insurance and Male Unemployment Duration in Canada

A model of unemployment duration is estimated with weekly micro data on Canadian men. Entitlement provisions in the unemployment insurance program and demand conditions are found to have a significant effect on the probability of leaving unemployment. The probability of a worker leaving unemployment declines with the duration of unemployment, holding unemployment insurance entitlement constant. When entitlement is allowed to vary, the probability of leaving first falls and then generally rises with unemployment duration. These results are robust with respect to allowing for person-specific unobserved heterogeneity and alternative specifications of duration dependence.