Base Period, Qualifying Period and the Equilibrium Rate of Unemployment

ABSTRACT: Employing a Mortensen-Pissarides type matching model, we show that a macroeconomic trade-off exists between the qualifying period and base period on the one hand and the amount and duration of the UI benefit on the other. If we take two otherwise identical countries with a similar rate of unemployment, it is possible for one country to offer its job seekers a high level of UI benefit with a long benefit duration, while neutralising the effect on the equilibrium rate of unemployment with a long quali-fying period and a short base period. Key-words: Matching model, unemployment insurance, base period, qualifying pe-riod, labour market polic