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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, Oslo, Norway)

  • Jensen, Peter

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

  • Thoursie, Anna

    ()
    (Swedish Trade Union Confederation, Stockholm, Sweden)

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 efficient tool for counteracting moral hazard problems in the benefit system.

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Bibliographic Info

Paper provided by Swedish Institute for Social Research in its series Working Paper Series with number 3/2002.

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Length: 28 pages
Date of creation: 14 May 2002
Date of revision:
Handle: RePEc:hhs:sofiwp:2002_003

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Keywords: Unemployment spells; unemployment compensation; non-parametric duration analysis.;

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References

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  1. 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, Elsevier, vol. 41(1), pages 45-72, February.
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Cited by:
  1. Bennmarker, Helge & Carling, Kenneth & Holmlund, Bertil, 2005. "Do benefit hikes damage job finding? Evidence from Swedish unemployment insurance reforms," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2005:22, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Hägglund, Pathric, 2007. "Are there pre-programme effects of Swedish active labour market policies? Evidence from three randomised experiments," Working Paper Series, Swedish Institute for Social Research 2/2007, Swedish Institute for Social Research.

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