Explaining the trasitions out of unemployement in Spain : the effect of unemployement insurance

In this article we study the factors that affect the transitions out of unemployment in Spain. We pay special attention to the impact of unemployment insurance benefits on the re-employment probability. We use a multinomiallogit model, and data from the EPA matched files from the second quarter of 1987 to the fourth quarter of 1995. Consistent with previous work, we find a negative effect of unemployment insurance receipt on the re-employment probability, and on withdrawal from the labor force. More importantly, we find a differential effect of benefit receipt when comparing time periods before and afier 1992. In april of that year the labor authority made eligibility requirements for unemployment insurance more restrictive, and curtailed benefit amounts