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The effect of unemployment benefits on re-employment rates: evidence from the Finnish UI-benefit reform

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Author Info

  • Uusitalo, Roope

    ()
    (Labour Institute for Economic Research)

  • Verho, Jouko

    ()
    (Department of Economics, University of Helsinki)

Abstract

In January 2003, the unemployment benefits in Finland were increased for workers with long employment histories. The average benefit increase was 15 per cent for the first 150 days of the unemployment spell. In this paper we evaluate the effect of the benefit increase on the duration of unemployment by comparing the changes in the re-employment hazard profiles among the unemployed who became eligible for the increased benefits to the changes in a comparison group whose benefit structure remained unchanged. We find that the benefit increase reduced the re-employment hazards at the beginning of the unemployment spell. The effect disappears after the eligibility period for the increased benefit expires.

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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2007:21.

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Length: 36 pages
Date of creation: 20 Sep 2007
Date of revision:
Handle: RePEc:hhs:ifauwp:2007_021

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Related research

Keywords: Unemployment insurance; duration models;

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Cited by:
  1. Goerke, Laszlo & Pannenberg, Markus & Ursprung, Heinrich W., 2007. "A Positive Theory of the Earnings Relationship of Unemployment Benefits," IZA Discussion Papers 3003, Institute for the Study of Labor (IZA).
  2. Martin Schindler & Mariya Aleksynska, 2011. "Labor Market Regulations in Low-, Middle- and High-Income Countries," IMF Working Papers 11/154, International Monetary Fund.
  3. Uusitalo, Roope & Verho, Jouko, 2010. "The effect of unemployment benefits on re-employment rates: Evidence from the Finnish unemployment insurance reform," Labour Economics, Elsevier, vol. 17(4), pages 643-654, August.
  4. Niklas Potrafke, 2010. "Labor market deregulation and globalization: empirical evidence from OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(3), pages 545-571, September.

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