The effects of unemployment benefits in Italy: evidence from an institutional change
AbstractWe document the effects of a change in the replacement rate and potential duration of theItalian Ordinary unemployment benefits scheme on the job search process. As of january 2001, benefits were extended from 6 to 9 months selectively for workers aged 50 or more, and the replacement rate was raised from 30 to 40 percent for all workers. We draw on social security records that cover the employment and welfare histories of a representative sample of individuals. Comparisons of eligible and non eligible workers across the relevant age and time thresholds conducted on a variety of samples and conditional on several specifications of the information set suggest that(a) the average duration of benefits’ collection increased by around one month for individuals entitled to 3 additional months of potential duration, while it did not change significantly for those only exposed to higher replacement rates;(b) the pace of reemployment is never found to be statistically different among claimants exposed to the new regime, although point estimates for those exposed to a longer duration point consistently toa2-4percentagepoints lower probability of reemployment at several horizons. Graphical evidence suggests that job-separation rates did not change with the new regime, while take-up apparently did, although the clear cyclical pattern could bias the picture. We conclude that, if any, the behavioral response induced by such institutional change, must have been economically modest. We discuss reasons why the response may have been so subdued.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of the Treasury, Ministry of the Economy and of Finance in its series Working Papers with number 7.
Date of creation: Jul 2012
Date of revision:
Other versions of this item:
- Alfonso Rosolia & Paolo Sestito, 2012. "The effects of unemployment benefits in Italy: evidence from an institutional change," Temi di discussione (Economic working papers) 860, Bank of Italy, Economic Research and International Relations Area.
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicola Pavoni & G. L. Violante, 2007.
"Optimal Welfare-to-Work Programs,"
Review of Economic Studies,
Oxford University Press, vol. 74(1), pages 283-318.
- Pavoni, Nicola & Violante, Giovanni L, 2006. "Optimal Welfare-to-Work Programs," CEPR Discussion Papers 5937, C.E.P.R. Discussion Papers.
- Nicola Pavoni & Giovanni L. Violante, 2005. "Optimal welfare-to-work programs," Discussion Paper / Institute for Empirical Macroeconomics 143, Federal Reserve Bank of Minneapolis.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marina Sabatini).
If references are entirely missing, you can add them using this form.