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To search or not to search? The effects of UI benefit extension for the older unemployed

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  • Kyyrä, Tomi
  • Ollikainen, Virve

Abstract

In Finland the older unemployed can collect unemployment insurance benefits until retirement, while the entitlement period for younger groups is two years. In 1997 the eligibility age of persons benefiting from extended benefits was raised from 53 to 55. This paper takes advantage of this quasi-experimental setting to identify the effect of extended benefits on transitions out of unemployment among the older unemployed. We apply a competing risks version of a split population duration model to account for multiple exit routes and the possibility that some of the older unemployed may not be active in the labour market due to pension rules. Our finding is that roughly half of the unemployed with extended benefits withdraw from job search.

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  • Kyyrä, Tomi & Ollikainen, Virve, 2008. "To search or not to search? The effects of UI benefit extension for the older unemployed," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2048-2070, October.
    • Handle: RePEc:eee:pubeco:v:92:y:2008:i:10-11:p:2048-2070
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    Cited by:

    1. Kyyrä, Tomi & Pesola, Hanna, 2020. "Long-term effects of extended unemployment benefits for older workers," Labour Economics, Elsevier, vol. 62(C).
    2. David Card & Raj Chetty & Andrea Weber, 2007. "The Spike at Benefit Exhaustion: Leaving the Unemployment System or Starting a New Job?," American Economic Review, American Economic Association, vol. 97(2), pages 113-118, May.
    3. Inna Petrunyk & Christian Pfeifer, 2022. "Diverse effects of shorter potential unemployment benefit duration on labor market outcomes in Germany," LABOUR, CEIS, vol. 36(3), pages 367-388, September.
    4. Kruse, Herman & Myhre, Andreas, 2021. "Early Retirement Provision for Elderly Displaced Workers," MPRA Paper 118689, University Library of Munich, Germany, revised 21 Sep 2023.
    5. Lukas Inderbitzin & Stefan Staubli & Josef Zweimüller, 2016. "Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 253-288, February.
    6. Pekka Ilmakunnas & Seija Ilmakunnas, 2014. "Age segregation and hiring of older employees: low mobility revisited," International Journal of Manpower, Emerald Group Publishing Limited, vol. 35(8), pages 1090-1115, October.
    7. Florent Fremigacci, 2010. "Maximum Benefits Duration and Older Workers’Transitions out of Unemployment : a Regression Discontinuity Approach," Documents de recherche 10-12, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    8. Bonev, Petyo, 2020. "Nonparametric identification in nonseparable duration models with unobserved heterogeneity," Economics Working Paper Series 2005, University of St. Gallen, School of Economics and Political Science.
    9. Lichter, Andreas, 2016. "Benefit Duration and Job Search Effort: Evidence from a Natural Experiment," IZA Discussion Papers 10264, Institute of Labor Economics (IZA).
    10. Le Barbanchon, Thomas, 2016. "The effect of the potential duration of unemployment benefits on unemployment exits to work and match quality in France," Labour Economics, Elsevier, vol. 42(C), pages 16-29.
    11. Baguelin, Olivier & Remillon, Delphine, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Labour Economics, Elsevier, vol. 30(C), pages 245-264.
    12. Lammers, Marloes & Bloemen, Hans & Hochguertel, Stefan, 2013. "Job search requirements for older unemployed: Transitions to employment, early retirement and disability benefits," European Economic Review, Elsevier, vol. 58(C), pages 31-57.
    13. Hans Bloemen, 2022. "Job search requirements for older unemployed workers," IZA World of Labor, Institute of Labor Economics (IZA), pages 235-235, November.
    14. Inna Petrunyk & Christian Pfeifer, 2018. "Shortening the potential duration of unemployment benefits and labor market outcomes: Evidence from a natural experiment in Germany," Working Paper Series in Economics 377, University of Lüneburg, Institute of Economics.
    15. Goldhaber, Dan & Krieg, John & Theobald, Roddy, 2014. "Knocking on the door to the teaching profession? Modeling the entry of prospective teachers into the workforce," Economics of Education Review, Elsevier, vol. 43(C), pages 106-124.
    16. Zweimüller, Josef, 2018. "Unemployment insurance and the labor market," Labour Economics, Elsevier, vol. 53(C), pages 1-14.
    17. Kyyrä, Tomi & Korkeamäki, Ossi, 2008. "A Distributional Analysis of Displacement Costs in an Economic Depression and Recovery," Discussion Papers 465, VATT Institute for Economic Research.
    18. Giesecke, Matthias & Kind, Michael, 2015. "Does Raising the Early Retirement Age Increase Reemployment of Older Unemployed Workers?," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113192, Verein für Socialpolitik / German Economic Association.
    19. Pekka Ilmakunnas & Seija Ilmakunnas, 2011. "Hiring older employees: Do incentives of early retirement channels matter?," Working Papers 268, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    20. Lars Højsgaard Andersen & Christian Dustmann & Rasmus Landersø, 2019. "Lowering Welfare Benefits: Intended and Unintended Consequences for Migrants and their Families," RF Berlin - CReAM Discussion Paper Series 1905, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    21. Bengtsson, Mats & König, Stefanie & Schönbeck, Simon & Wadensjö, Eskil, 2022. "Leaving the Labor Market Early in Sweden – Learning from International Experience," IZA Discussion Papers 15327, Institute of Labor Economics (IZA).
    22. Kruse, Herman & Myhre, Andreas, 2021. "Early Retirement Provision for Elderly Displaced Workers," MPRA Paper 109431, University Library of Munich, Germany.
    23. Damien Euzénat, 2018. "Expiry of Unemployment Benefits: What Impact on Post Unemployment Job Satisfaction?," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 503-504, pages 61-78.
    24. Kalin, Salla & Kyyrä, Tomi & Matikka, Tuomas, 2023. "Combining Part-time Work and Social Benefits: Empirical Evidence from Finland," Working Papers 159, VATT Institute for Economic Research.
    25. Márton Csilalg & Ágota Scharle & Balázs Munkácsy, 2023. "Evaluating the effect of a drastic cut in unemployment benefit duration on re-employment and wages of jobseekers," CERS-IE WORKING PAPERS 2326, Institute of Economics, Centre for Economic and Regional Studies.

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