Unemployment duration and the duration of entitlement to unemployment benefits: an empirical study for Britain

The aim of this paper is to investigate the impact of the expected duration of unemployment benefits on the individual probability of leaving unemployment. The theory predicts that the probability of leaving unemployment will increase near the time of the expected exhaustion of unemployment insurance. Still a limited number of empirical studies is available for European countries. The data used for the analysis relate to Britain. The probability of leaving unemployment to take up a full-time job is distinguished from the probability of exiting into other states. It is concluded that although there is some evidence of spikes in the hazard rate near the time of expected benefit exhaustion, no statistically significant benefit exhaustion effect is found.