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Unemployment Durations in West-Germany Before and After the Reform of the Unemployment Compensation System During the 1980s

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  • Fitzenberger, Bernd
  • Wilke, Ralf A.

Abstract

This paper empirically analyzes the distribution of unemployment durations in West- Germany before and after the changes during the mid 1980s in the maximum entitlement periods for unemployment benefits for elderly unemployed. The analysis is based on the comprehensive IAB employment subsample containing register panel data for about 500.000 individuals in West Germany. We introduce two proxies for unemployment, since the data do not involve a precise economic definition of unemployment. We provide a theoretical analysis of the link between the durations of nonemployment and of unemployment durations between jobs. In our empirical analysis we find significant changes in the distributions of nonemployment durations for older unemployed individuals. At the same time, the distribution of unemployment durations between jobs did not change in response to the reforms. Our findings are consistent with an interpretation that many firms and workers used the more beneficial laws as a part of early retirement packages but those workers who were still looking for a job did not reduce their search effort in response to the extension of the maximum entitlement periods. This interpretation is consistent with a simulation of our theoretical model under economically plausible assumptions. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-24.

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Date of creation: 2004
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Handle: RePEc:zbw:zewdip:2030

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Keywords: definition of unemployment; duration analysis; unemployment insurance;

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  1. Wilke, Ralf A., 2004. "New Estimates of the Duration and Risk of Unemployment for West-Germany," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 04-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Wilke, Ralf A., 2003. "Eine empirische Analyse von Sanktionen für Arbeitslose in Westdeutschland während der 1980er und 1990er Jahre," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 03-71, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. van Ours, Jan C & Vodopivec, Milan, 2006. "Shortening the Potential Duration of Unemployment Benefits Does Not Affect the Quality of Post-Unemployment Jobs: Evidence from a Natural Experiment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5741, C.E.P.R. Discussion Papers.
  4. Narendranathan, W & Nickell, S & Stern, J, 1985. "Unemployment Benefits Revisited," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 95(378), pages 307-29, June.
  5. David Card & Raj Chetty & Andrea Weber, 2007. "The Spike at Benefit Exhaustion: Leaving the Unemployment System or Starting a New Job?," American Economic Review, American Economic Association, American Economic Association, vol. 97(2), pages 113-118, May.
  6. Gangl, Markus, 2002. "Unemployment benefits as a search subsidy: New evidence on duration and wage effects of unemployment insurance," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 02-208, Social Science Research Center Berlin (WZB).
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