2014 Conference

Using the Survey of Income and Program Participation (SIPP) Data, this paper attempts to measure whether periods of short term unemployment experienced in states with high levels of unemployment have a less negative effect on individuals than periods of short term unemployment experienced in states with low levels of unemployment. In order to explore this quesion, individual level employment data is constructed for all the months captured between the 1984 and 2008 Panel datasets. Respondent's in each Panel are interviewed every four months and answer questions pertaining to the three previous months for a total of three or four years. Respondent's indicate how many weeks of the month they worked and whether they were looking for work. This information along with a series of individual characteristics and changes in income are used to determine, first on a national level, the effects of short term unemployment. Then dummy variables are added to indicate whether the state has high or low unemployment rates, relative to the national unemployment rate. From there, conclusions are drawn as to whether the effect of short term unemployment is greater or smaller in states with high levels of unemployment versus states with low levels of unemployment.