more selectively), and to therefore find a match more often. Besides, since the search process is time-consuming, these workers also experience longer unemployment spells.

102. On the other hand, it is possible that receiving benefits increases workers' reservation wages, making them less willing to accept job offers, and hence decreasing their probability of exit (i.e. increasing unemployment duration). We believe it is important to distinguish between these two hypotheses, and we attempt to do so here using the Labor Force Survey. But before we get into the nuts and bolts of the exercise, there are two issues concerning the data that require attention.

103. Both the unemployment insurance and the social assistance/support systems require that workers be registered at the Employment Office (i.e. Unemployment Registry) in order to qualify for benefit payments. This implies that all recipients will be registered, and, if registration is considered a search channel, looking for a job, eliminating all potential variation in the data. Second, by construction all unemployed workers are looking for a job, hence we cannot restrict the analysis to the unemployed only.

> 104. In dealing with the first issue, we consider an alternative, more restrictive definition of 'search', namely 'active search'. A worker is said to be actively searching for a job, if she is making use of search channels other than the Employment Office (e.g. private job agencies, placing/reading advertisements, etc.). When we correlate this new variable with unemployment insurance recipiency, we find that workers entitled to benefits seem to be more active in their search than those who are not, but also that their behavior varies substantially depending on whether they are actually receiving the benefits or not (Table XV). In particular, 40 percent of those receiving unemployment insurance are searching actively, while only 32 percent of those with no benefits and 60 percent of those who have exhausted the benefits are doing so. The group least likely to search actively is that of nonregistered workers.

105. In order to avoid the second problem, we use the sampling methodology discussed in the data section and select a new sample that includes all those individuals who (i) become non-employed during the survey period or who (ii) had been non-employed for less than three months at the time of the first interview. Notice that this sample can be considered an extension of our original sample of unemployed workers,<sup>26</sup> and that the information on unemployment insurance and social assistance/support obtained using this methodology is still accurate. A total of 2,494 workers are then selected, two thirds of them are unemployed and the remaining 30 percent is out of the labor force (Table XVI). Approximately 65 percent of the observations in the sample correspond to workers looking for a job, although less than half of them does so 'actively'. In addition, about 45 percent of the sample receives unemployment insurance, and 13 percent receives social assistance/support.

> **26** Strictly speaking this new sample does not contain all workers included in the original sample because we

> require that the worker was employed before, whereas in the previous case we only required that she was not unemployed (this would include 'out of the labor force', as well as 'employed'). This explains why the sample size does not increase substantially when we select the new sample.

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