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The effects of unemployment insurance on labor supply and search outcomes : regression discontinuity estimates from Germany

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Author Info

  • Schmieder, Johannes F.
  • Wachter, Till von
  • Bender, Stefan

    ()
    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

Abstract

"This paper evaluates the impact of large changes in the duration of unemployment insurance (UI) in different economic environments on labor supply, job matches, and search behavior. We show that differences in eligibility thresholds by exact age give rise to a valid regression discontinuity design, which we implement using administrative data on the universe of new unemployment spells and career histories over twenty years from Germany. We find that increases in UI have small to modest effects on non-employment rates, a result robust over the business cycle and across demographic groups. Thus, large expansions in UI during recessions do not lead to lasting increases in unemployment duration, nor can they explain differences in unemployment durations across countries. We do not find any effect of increased UI duration on average job quality, but show that the mean potentially confounds differential effects on job search across the distribution of UI duration. However, it appears that for a majority of UI beneficiaries increases in UI duration may lead to small declines in wages." (Author's abstract, IAB-Doku) ((en))

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Bibliographic Info

Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 201004.

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Length: 58 pages
Date of creation: 03 Feb 2010
Date of revision:
Handle: RePEc:iab:iabdpa:201004

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Keywords: Arbeitslosenversicherung; Arbeitskräfteangebot; Arbeitsuche; Lohnhöhe; Arbeitslosigkeitsdauer; Konjunkturzyklus; geschlechtsspezifische Faktoren; matching; amtliche Statistik;

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Cited by:
  1. Michael W. L. Elsby & Bart Hobijn & Aysegul Sahin, 2010. "The Labor Market in the Great Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 1-69.
  2. Forslund, Anders & Fredriksson, Peter & Vikström, Johan, 2011. "What active labor market policy works in a recession?," Research Papers in Economics, Stockholm University, Department of Economics 2011:9, Stockholm University, Department of Economics.
  3. David R. Howell & Bert M. Azizoglu, 2011. "Unemployment Benefits and Work Incentives: The U.S. Labor Market in the Great Recession (revised)," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp257_revised, Political Economy Research Institute, University of Massachusetts at Amherst.

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