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Unemployment Duration, Incentives and Institutions - A Micro-Econometric Analysis Based on Scandinavian Data

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Author Info

  • Røed, Knut

    ()
    (The Ragnar Frisch Centre for Economic Research)

  • Jensen, Peter

    ()
    (Department of Economics, The Aarhus School of Business, Denmark)

  • Thoursie, Anna

    ()
    (Swedish Institute for Social Research, Swedish Trade Union Confederation)

Abstract

Based on a combined register database for Norwegian and Swedish unemployment spells, we use the ‘between-countries-variation’ in the unemployment insurance systems to identify causal effects. The elasticity of the job hazard rate with respect to the benefit replacement ratio is around -1.0 in Norway and -0.5 in Sweden. The limited benefit duration period in Sweden has a large positive impact on the hazard rate, despite generous renewal options through participation in labour market programs. Compulsory program participation seems to operate as a ‘stick’, rather than a ‘carrot’, and is therefore an efficienttool for counteracting moral hazard problems in the benefit system.

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File URL: http://www.sv.uio.no/econ/english/research/memorandum/pdf-files/2002/Memo-09-2002.pdf
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Bibliographic Info

Paper provided by Oslo University, Department of Economics in its series Memorandum with number 09/2002.

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Length: 29 pages
Date of creation: 16 Jun 2003
Date of revision:
Handle: RePEc:hhs:osloec:2002_009

Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Email:
Web page: http://www.oekonomi.uio.no/indexe.html
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Keywords: Unemployment spells; unemployment compensation; non-parametric duration analysis;

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References

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  1. Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
  2. Holmlund, B., 1997. "Unemployment Insurance in Theory and Practice," CEPR Discussion Papers 380, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  3. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. 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.
  5. Winter-Ebmer, Rudolf, 1996. "Potential Unemployment Benefit Duration and Spell Length: Lessons from a Quasi-experiment in Austria," CEPR Discussion Papers 1534, C.E.P.R. Discussion Papers.
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  7. Berg, G. van den & Ours, J.C. van, 1996. "Unemployment dynamics and duration dependence," Open Access publications from Tilburg University urn:nbn:nl:ui:12-86874, Tilburg University.
  8. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July.
  9. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
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  11. Wurzel,Eckhard, . "Staggered entry and unemployment durations - An application to german data," Discussion Paper Serie B 131, University of Bonn, Germany.
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  14. Carling, Kenneth & Edin, Per-Anders & Harkman, Anders & Holmlund, Bertil, 1996. "Unemployment duration, unemployment benefits, and labor market programs in Sweden," Journal of Public Economics, Elsevier, vol. 59(3), pages 313-334, March.
  15. Groot, Wim, 1990. "The effects of benefits and duration dependence on re-employment probabilities," Economics Letters, Elsevier, vol. 32(4), pages 371-376, April.
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  17. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
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Citations

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Cited by:
  1. Helge Bennmarker & Kenneth Carling & Bertil Holmlund, 2007. "Do Benefit Hikes Damage Job Finding? Evidence from Swedish Unemployment Insurance Reforms," LABOUR, CEIS, vol. 21(1), pages 85-120, 03.
  2. Hägglund, Pathric, 2007. "Are there pre-programme effects of Swedish active labour market policies? Evidence from three randomised experiments," Working Paper Series 2/2007, Swedish Institute for Social Research.

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