Unemployment insurance and the distribution of unemployment spells

In this paper administrative data from the unemployment-insurance (UI) system are used to examine the distribution of unemployment spells. Hazard plots of the data reveal a strong clustering around the benefit exhaustion point. In addition, estimation of the effects of the exhaustion point and of the UI benefit level on spell lengths obtained with a non-parametric proportional-hazards model - estimated by direct maximization of the general likelihood function - shows significant effects of both. However, the effect of the exhaustion point on the hazard is not proportional, making detection of its effect somewhat difficult.