Identifying Unemployment Insurance Income Effects with a Quasi-Natural Experiment
AbstractThis paper acknowledges that UI has a non-distortionary income effect generated by easing the liquidity constraints of the unemployed. Using an exogenous increase in the entitlement period as a quasi-experimental setting, we find evidence of an important income effect. The extension of the entitlement period prolongs unemployment spells, but its effect is decreasing with the degree of liquidity constraints (indexed by wages quintiles). An exception to this pattern is the behavior of individuals in the first wages quintile. The fact that the most constrained individuals extend the least their unemployment spells conforms to the nonstationarity of the job search process. This result points to the possibility that the UI system may become regressive, benefiting significantly less those at the bottom of the wage distribution, who find it harder to benefit from extended UI entitlements.
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 Banco de Portugal, Economics and Research Department in its series Working Papers with number w200710.
Date of creation: 2007
Date of revision:
Find related papers by JEL classification:
- 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
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
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.:
- 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.
- van Ours, Jan C. & Vodopivec, Milan, 2004. "How Changes in Benefits Entitlement Affect Job-Finding: Lessons from the Slovenian "Experiment"," IZA Discussion Papers 1181, Institute for the Study of Labor (IZA).
- Mário Centeno & Álvaro Novo, 2009. "Reemployment wages and UI liquidity effect: a regression discontinuity approach," Portuguese Economic Journal, Springer, vol. 8(1), pages 45-52, April.
- Centeno, Luis & Centeno, Mário & Novo, Álvaro A., 2009.
"Evaluating job-search programs for old and young individuals: Heterogeneous impact on unemployment duration,"
Elsevier, vol. 16(1), pages 12-25, January.
- Luis Centeno & Mário Centeno & Álvaro A. Novo, 2008. "Evaluating Job Search Programs for Old and Young Individuals: Heterogeneous Impact on Unemployment Duration," Working Papers w200806, Banco de Portugal, Economics and Research Department.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (DEE-NTDD).
If references are entirely missing, you can add them using this form.