Unemployment Duration and the Length of Entitlement Periods for Unemployment Benefits: Do the IAB Employment Subsample and the German Socio-Economic Panel Yield the Same Results?

We compare information on the length of unemployment spells contained in the IAB employment subsample (IABS) and in the German Socio-Economic Panel (GSOEP). Due to the lack of information on registered unemployment in the IABS, we use two proxies of unemployment in the IABS as introduced by Fitzenberger/Wilke (2004). The first proxy comprises all periods of nonemployment after an employment spell which contain at least one period with unemployment compensation transfers. The second proxy includes all episodes between two employment spells during which an individual continuously received unemployment benefits. Estimation of standard duration models indicates that conclusions drawn from the IABS and the GSOEP differ in many cases. While the GSOEP suggests that the hazard rate has a maximum at about 12 months of unemployment, the IABS results suggest that this maximum is at about 20 months. Contrary to our GSOEP results and contrary to many results based on the GSOEP found in the literature, we find a statistically significant association between longer maximum entitlement periods of unemployment benefits (‘Arbeitslosengeld’) and longer unemployment durations for men in the IABS. The results for women do not show such clear patterns. The large sample size of the IABS also allows to trace out statistically significant effects of characteristics such as regional and industry indicators, which is generally not possible in the relatively small GSOEP.