How unemployment benefits affect individuals of different wealth classes: Some evidence from Italy

Abstract

Purpose

This paper investigates whether the effect of unemployment benefits (UB) on unemployment duration is the same for individuals belonging to different wealth groups.

Design/methodology/approach

Using a sample of newly unemployed individuals from Italy in 2007, we perform estimations of semi‐parametric and parametric Cox hazard models and finds a significant interaction between benefits and wealth.

Findings

In particular, we show that the mitigating effect of benefits on liquidity constraints is less marked for individuals from richer households and therefore, for these individuals, benefits do not increase unemployment duration.

Originality/value

The results also show that liquidity constraints are important in determining unemployment duration and that wealth has an important role in the actual effect of UB.

Citation

Corsini, L. (2013), "How unemployment benefits affect individuals of different wealth classes: Some evidence from Italy", International Journal of Manpower, Vol. 34 No. 6, pp. 693-711. https://doi.org/10.1108/IJM-10-2012-0153