This paper analyzes a labor market program which enables workers to leave employment temporarily with a compensation financed by the taxpayers. The main aim of the program was to increase the chances of the unemployed finding a job. However, the empirical analysis reveals a clear negative relationship between the unemployment rate and transition rates from employment into the paid leave scheme. Program participation is low, precisely in those labor market states, where the scheme has a potential to perform as a remedy by increasing the transition rate from unemployment to employment. Several possible explanations are discussed
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Paper provided by Carleton - School of Public Administration in its series Papers with number
99-19.
Find related papers by JEL classification: J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy