Re-employment probabilities of unemployment benefit recipients

Abstract

This article studies transitions out of unemployment for benefit recipients in Spain. We analyse the duration of unemployment, distinguishing between spells that end in recall (workers returning to the previous employer) and spells that end in exit to a new job. This distinction allows us to find that the recall hazard rate increases around the time of exhaustion of benefits. However, this happens only for workers receiving Unemployment Insurance (UI). Because we are unable to replicate this result for workers receiving Unemployment Assistance (UA), we believe the finding lends support to the hypothesis that in Spain firms and workers make a strategic use of UI