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Unemployment Insurance and Incentives in Hungary

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  • Micklewright, John
  • Nagy, Gyula

Abstract

We investigate the effect of changes in unemployment insurance (UI) rules in Hungary on the outflow rate from the UI register. Existing claims to UI are `grandfathered' in Hungary when UI rules change - new rules are applied only to new claims and existing claims continue to be administered under the old rules. Entitlement periods to UI were cut substantially at the start of 1993 and using non-parametric methods we compare the outflow rate from claims beginning in January 1993 with those beginning in December 1992 - a total sample size of 80,000 claims. Differences in job exit hazards between the December and January samples are found for some work history groups, but there are no sharp rises in the hazards before expiry of UI entitlement. Hazards of exits to labour market programmes do rise just before UI expiry. The results suggest the unemployed in Hungary to be fairly inelastic to changes in UI benefits.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1118.

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Date of creation: Jan 1995
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Handle: RePEc:cpr:ceprdp:1118

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Related research

Keywords: Hungary; Incentives; Transition; Unemployment Benefit;

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Cited by:
  1. Martina Lubyova & Jan C. van Ours, 1997. "Work Incentives and the Probability of Leaving Unemployment in the Slovak Republic," William Davidson Institute Working Papers Series 82, William Davidson Institute at the University of Michigan.
  2. Micklewright, John & Nagy, Gyula, 1999. "Living Standards and Incentives in Transition: the Implications of Unemployment Insurance Exhaustion in Hungary," CEPR Discussion Papers 2061, C.E.P.R. Discussion Papers.
  3. Lubyova, M. & Ours, J.C. van, 1998. "Unemployment Durations of Job Losers in a Labor Market in Transition," Discussion Paper 1998-39, Tilburg University, Center for Economic Research.
  4. Alexandru Voicu, 2002. "Employment Dynamics in the Romanian Labor Market. A Markov Chain Monte Carlo Approach," Computing in Economics and Finance 2002 349, Society for Computational Economics.
  5. Puhani, Patrick A., 1996. "Poland on the dole: unemployment benefits, training, and long-term unemployment during transition," ZEW Discussion Papers 96-30, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Polachek, Solomon & Xiang, Jun, 2005. "The Effects of Incomplete Employee Wage Information: A Cross-Country Analysis," IZA Discussion Papers 1735, Institute for the Study of Labor (IZA).

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