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This study tries to empirically analyze the effect of unemployment benefit on displaced workers reemployment path and probability. Reemployment path is defined into (1)stable employment, (2)unstable employment(temporary, contractual), (3)not employed. For the analysis of multiple path alternatives and their respective probabilities, multinomial logit model is used. The data used in this analysis comes from two sources: one is Employment Insurance DB which contains individual insuree`s record on background characteristics and the other is a follow-up survey data that capture after-quit information on job search and labor market transition. The two data sources are merged by I.D. and into a combined data set that provides information on important explanatory variables. The data shows that beneficiaries and non-beneficiaries are characteristically different: beneficiaries are relatively older, have long term tenure, are displaced from large firms, and more likely not to have alternative income source in the family. This study finds that the beneficiaries of unemployment benefit are less likely to be reemployed than the non-beneficiaries by about 20% in probability. Even when reemployed, beneficiaries are more likely to be reemployed into unstable jobs. This attest to the often observed negative effect of unemployment benefit on reemployment. But, caution need to be exerted with regard to interpretation of the parameter estimate especially for benefit receiving. That is, the estimated parameter reflects the effect of voluntary v.s. non-voluntary quit or leaving as well as the effect of the benefit itself. Also should be mentioned the peculiar reemployment market structure: that is, the labor market for parallel transition (from one job to another) in Korea is relatively less developed than in advanced countries. That should have exerted a negative effect on the beneficiaries` reemployment path and probability. Also should be emphasized the long-term effect of unemployment benefit, which might have a positive effect on reemployment with regard to the quality of the job reemployed. That is, the job ultimately taken by the beneficiaries might be better in quality than that taken by the non-beneficiaries. This issue is left unanalyzed for another round of analysis.
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