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Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change

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  • Rafael Lalive
  • Josef Zweimüller

Abstract

This paper analyzes the impact of the Austrian Regional Extended Benefit Program (REBP) on the labor market outcomes for elderly workers in Austria. The REBP extended entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions. This policy change created a large-scale quasi-experimental situation from which a lot can be learned about the impact of unemployment insurance rules on the dynamics of employment, unemployment, and wages. We find that the REBP led to a tremendous increase in unemployment, which was due to both an increase in the inflow to and the outflow from unemployment. The REBP also induced a strong increase in early retirement and in many cases, in particular for steel workers, entering unemployment meant withdrawal from the labor force. Finally, we show that there were also non-negligible effects of extended benefits on the level and the distribution of wages.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 694.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_694

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Keywords: quasi-experiments; maximum benefit duration; unemployment inflow; duration of unemployment; early retirement; earnings; inequality;

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References

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Citations

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Cited by:
  1. Tatsiramos, K. & Ours, J.C. van, 2012. "Labor Market Effects of Unemployment Insurance Design," Discussion Paper, Tilburg University, Center for Economic Research 2012-082, Tilburg University, Center for Economic Research.
  2. Rafael Lalive & Jan C. van Ours & Josef Zweimüller, 2004. "How Changes in Financial Incentives Affect the Duration of Unemployment," CESifo Working Paper Series 1337, CESifo Group Munich.
  3. Lalive, Rafael, 2006. "How do extended benefits affect unemployment duration? A regression discontinuity approach," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2006:8, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. Lalive, Rafael & Zweimuller, Josef, 2004. "Benefit entitlement and unemployment duration: The role of policy endogeneity," Journal of Public Economics, Elsevier, vol. 88(12), pages 2587-2616, December.
  5. Björn Christensen, 2003. "Die Reform der Arbeitslosenversicherung im Zuge der Agenda 2010 und ihr Einfluss auf die Arbeitslosigkeitsdauer � Simulationsergebnisse auf Basis der nicht-stationären Suchtheorie," Kiel Working Papers 1171, Kiel Institute for the World Economy.
  6. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations: Evidence from the Belgian Firm's Data," Open Access publications from Tilburg University urn:nbn:nl:ui:12-92281, Tilburg University.
  7. Arslan, Yavuz & Taskin, Temel, 2011. "Explaining the gender gaps in unemployment across OECD countries," MPRA Paper 34873, University Library of Munich, Germany.

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