Explaining the Changing Dynamics of Unemployment: Evidence from Civil War Records / Dora L. Costa.

By:

Costa, Dora L

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Historical Working Paper Series (National Bureau of Economic Research) ; no. h0051.Publication details: Cambridge, Mass. National Bureau of Economic Research 1993.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: I investigate why workers' probability of leaving unemployment has fallen since 1900 by estimating the impact of a large government transfer, the first major pension program in the United States, covering Union Army veterans of the Civil War. The pension, because of the program's rules, was a strict income transfer and these rules create a natural experiment to identify the effects of pensions and health on labor supply. Pensions exerted a large impact on the probability of long-term, but not of short-term unemployment. Estimated hazards suggest that, consistent with a job search model, pensions affected the probability of both entering and exiting unemployment. But, pensions mainly lowered the probability of leaving unemployment. The findings suggest that explanations for the secular rise in long-term unemployment should focus on factors such as the secular increase in wealth and the increased availability and generosity of unemployment benefits.

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Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber h0051 (Browse shelf(Opens below))	Not For Loan

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December 1993.

I investigate why workers' probability of leaving unemployment has fallen since 1900 by estimating the impact of a large government transfer, the first major pension program in the United States, covering Union Army veterans of the Civil War. The pension, because of the program's rules, was a strict income transfer and these rules create a natural experiment to identify the effects of pensions and health on labor supply. Pensions exerted a large impact on the probability of long-term, but not of short-term unemployment. Estimated hazards suggest that, consistent with a job search model, pensions affected the probability of both entering and exiting unemployment. But, pensions mainly lowered the probability of leaving unemployment. The findings suggest that explanations for the secular rise in long-term unemployment should focus on factors such as the secular increase in wealth and the increased availability and generosity of unemployment benefits.