How Changes in Benefits Entitlement Affect Job-Finding: Lessons from the Slovenian "Experiment"
AbstractIn 1998 the Slovenian UI system was drastically reformed. The reform reduced the potential duration of unemployment benefits substantially and simultaneously improved employment services offered to, and monitoring of, the recipients. We find that the reduction in potential benefit duration had a positive effect on the exit rate out of unemployment – both to employment and to other destinations – at various durations of unemployment spells and for many categories of unemployed workers. We also identify a clear spike in the exit rate out of unemployment in the month unemployment benefits expire (and a smaller spike in the month thereafter), and for males an increase of job-finding rate in the third month of unemployment, a likely consequence of a reduction of the level of benefit that occurs at that point. Interestingly, post-unemployment wages of recipients were not affected after the change of the law, suggesting that higher job-finding rates following the reduction of benefits were not produced by reduced reservation wages (higher acceptance probability) but rather more effective job-search activity.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1181.
Length: 48 pages
Date of creation: Jun 2004
Date of revision:
Publication status: published in: Journal of Labor Economics, 2006, 24 (2), 351-378
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Other versions of this item:
- Ours, Jan van & Vodopivec, Milan, 2005. "How changes in benefits entitlement affect job-finding: lessons from the slovenian experiment," Social Protection Discussion Papers 32548, The World Bank.
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
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