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Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change

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Author Info

  • Lalive, Rafael

    ()
    (University of Lausanne)

  • Zweimüller, Josef

    ()
    (University of Zurich)

Abstract

This paper analyzes the impact of the Austrian Regional Extended Benefit Program (REBP) on the labor market outcomes for elderly workers in Austria. The REBP extended entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions. This policy change created a large-scale quasi-experimental situation from which a lot can be learned about the impact of unemployment insurance rules on the dynamics of employment, unemployment, and wages. We find that the REBP led to a tremendous increase in unemployment, which was due to both an increase in the inflow to and the outflow from unemployment. The REBP also induced a strong increase in early retirement and in many cases, in particular for steel workers, entering unemployment meant withdrawal from the labor force. Finally, we show that there were also non-negligible effects of extended benefits on the level and the distribution of wages.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 444.

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Length: 48 pages
Date of creation: Feb 2002
Date of revision:
Publication status: published in: Jonas Agell, Michael Keen and Alfons Weichenrieder (eds.), Labor Market Institutions and Public Regulation, 2004, 63-100
Handle: RePEc:iza:izadps:dp444

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Related research

Keywords: inequality; early retirement; earnings; duration of unemployment; unemployment inflow; maximum benefit duration; Quasi-experiments;

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References

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Citations

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Cited by:
  1. Björn Christensen, 2003. "Die Reform der Arbeitslosenversicherung im Zuge der Agenda 2010 und ihr Einfluss auf die Arbeitslosigkeitsdauer � Simulationsergebnisse auf Basis der nicht-stationären Suchtheorie," Kiel Working Papers 1171, Kiel Institute for the World Economy.
  2. Rafael Lalive, 2006. "How do Extended Benefits affect Unemployment Duration? A Regression Discontinuity Approach," IEW - Working Papers 294, Institute for Empirical Research in Economics - University of Zurich.
  3. Tatsiramos, K. & Ours, J.C. van, 2012. "Labor Market Effects of Unemployment Insurance Design," Discussion Paper 2012-082, Tilburg University, Center for Economic Research.
  4. Lalive, Rafael & van Ours, Jan C & Zweimüller, Josef, 2005. "How Changes in Financial Incentives Affect the Duration of Unemployment," CEPR Discussion Papers 4986, C.E.P.R. Discussion Papers.
  5. Arslan, Yavuz & Taskin, Temel, 2011. "Explaining the gender gaps in unemployment across OECD countries," MPRA Paper 34873, University Library of Munich, Germany.
  6. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations: Evidence from the Belgian Firm's Data," Open Access publications from Tilburg University urn:nbn:nl:ui:12-92281, Tilburg University.
  7. Lalive, Rafael & Zweimüller, Josef, 2002. "Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity," CEPR Discussion Papers 3363, C.E.P.R. Discussion Papers.

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