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Does an increase in unemployment income lead to longer unemployment spells? Evidence using Danish unemployment assistance data

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  • Ott Toomet

    ()
    (Department of Economics, University of Aarhus, Denmark)

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    Abstract

    Danish unemployment assistance depends on age; it increases by 70% when unemployed individuals turn 25. This feature is used to identify the impact of income on the unemployment-to-employment hazard rate. A mixed proportional hazard framework based on a 10% representative Danish registry data set is used. The results indicate that the income effect for females is negative and significant, corresponding to an income elasticity of -0.4. The effect for males is positive but insignifcant.

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    File URL: ftp://ftp.econ.au.dk/afn/wp/05/wp05_07.pdf
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    Bibliographic Info

    Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2005-07.

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    Length: 40
    Date of creation: 23 May 2005
    Date of revision:
    Handle: RePEc:aah:aarhec:2005-07

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    Web page: http://www.econ.au.dk/afn/

    Related research

    Keywords: welfare benefts; incentive effect; unemployment duration;

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    1. Bergstrom, R & Edin, P-A, 1992. "Time Aggregation and the Distributional Shape of Unemployment Duration," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(1), pages 5-30, Jan.-Marc.
    2. Micklewright, John & Nagy, Gyula, 1999. "Living standards and incentives in transition: the implications of UI exhaustion in Hungary," Journal of Public Economics, Elsevier, vol. 73(3), pages 297-319, September.
    3. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July.
    4. Dale T. Mortensen, 1977. "Unemployment insurance and job search decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
    5. John T. Addison & Pedro Portugal, 2004. "How Does the Unemployment Insurance System Shape the Time Profile of Jobless Duration?," Working Papers w200401, Banco de Portugal, Economics and Research Department.
    6. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The identifiability of the mixed proportional hazards competing risks model," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 65(3), pages 701-710.
    7. Bratberg, Espen & Vaage, Kjell, 2000. "Spell durations with long unemployment insurance periods," Labour Economics, Elsevier, vol. 7(2), pages 153-180, March.
    8. Bolvig, Iben & Jensen, Peter & Rosholm, Michael, 2003. "The Employment Effects of Active Social Policy," IZA Discussion Papers 736, Institute for the Study of Labor (IZA).
    9. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
    10. Zhang, Tao, 2003. "A Monte Carlo study on non-parametric estimation of duration models with unobserved heterogeneity," Memorandum 25/2003, Oslo University, Department of Economics.
    11. Arulampalam, Wiji & Stewart, Mark B, 1995. "The Determinants of Individual Unemployment Durations in an Era of High Unemployment," Economic Journal, Royal Economic Society, vol. 105(429), pages 321-32, March.
    12. Brinch,C., 2000. "Identification of structural duration dependence and unobserved heterogeneity with time-varying," Memorandum 20/2000, Oslo University, Department of Economics.
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