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For every period an individual works beyond the qualifying period I, months of eligibility i increases by 1.
Individuals who enter employment from Income Assistance or who have exhausted their unemployment benefits become eligible to receive unemployment benefits after I months of employment.
The value function for unemployed individuals with i months of benefits remaining is V^{U}(i) =left{ begin{array}{ll} max_{p(i)} left{b_{u}-c_{u}[p(i)^{z}]right.
IA recipients receive benefits (b a ) and pay search costs c a [p(0) z ] every month they remain on IA, where z is the elasticity of search costs with respect to search effort, c a is a parameter capturing the disutility of search effort, and p(i) is optimal search effort for individuals with i months of unemployment benefits remaining.
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