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The Long-Term Effects of UI Extensions on Employment

Author

Listed:
  • Johannes F. Schmieder
  • Till von Wachter
  • Stefan Bender

Abstract

The majority of papers analyzing the employment effects of unemployment insurance (UI) benefit durations focus on the duration of the first unemployment spell. In this paper, we make two contributions. First, we use a regression discontinuity design to analyze the long-term effects of extensions in UI durations. These estimates differ from standard estimates in that they incorporate differences in UI benefit receipt and employment due to recurrent unemployment spells. Second, we derive a welfare formula of UI extensions that incorporates recurrent nonemployment spells.

Suggested Citation

  • Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2012. "The Long-Term Effects of UI Extensions on Employment," American Economic Review, American Economic Association, vol. 102(3), pages 514-519, May.
    • Handle: RePEc:aea:aecrev:v:102:y:2012:i:3:p:514-19
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    References listed on IDEAS

    as
    1. Raj Chetty, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 173-234, April.
    2. Olivier Jean Blanchard & Peter Diamond, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 417-434.
    3. Lemieux, Thomas & MacLeod, W. Bentley, 2000. "Supply side hysteresis: the case of the Canadian unemployment insurance system," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 139-170, October.
    4. Raj Chetty, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 173-234, April.
    5. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
    6. Johannes F. Schmieder† & Till von Wachter & Stefan Bender, 2011. "The Effects Of Extended Unemployment Insurance Over The Business Cycle: Evidence From Regression Discontinuity Estimates Over Twenty Years," Boston University - Department of Economics - Working Papers Series WP2011-063, Boston University - Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gonzalez-Rozada, Martin & Ruffo, Hernán, 2016. "Optimal unemployment benefits in the presence of informal labor markets," Labour Economics, Elsevier, vol. 41(C), pages 204-227.
    2. Parag A. Pathak & Alvin E. Roth, 2013. "Matching with Couples: Stability and Incentives in Large Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(4), pages 1585-1632.
    3. Lechthaler, Wolfgang & Ring, Patrick, 2021. "Labor force participation, job search effort and unemployment insurance in the laboratory," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 748-778.
    4. Kambayashi, Ryo & Kato, Takao, 2012. "Good Jobs, Bad Jobs, and the Great Recession: Lessons from Japan's Lost Decade," IZA Discussion Papers 6666, Institute of Labor Economics (IZA).
    5. Konstantinos Tatsiramos & Jan C. Ours, 2014. "Labor Market Effects Of Unemployment Insurance Design," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 284-311, April.
    6. Le Barbanchon, Thomas & Rathelot, Roland & Roulet, Alexandra, 2019. "Unemployment insurance and reservation wages: Evidence from administrative data," Journal of Public Economics, Elsevier, vol. 171(C), pages 1-17.
    7. Juan Francisco Jimeno & Aitor Lacuesta & Marta Martínez-Matute & Ernesto Villanueva, 2016. "Education, labour market experience and cognitive skills: evidence from PIAAC," Working Papers 1635, Banco de España.
    8. Springer, Angelina, 2013. "Selbstständige Leistungsbezieher in der Arbeitslosenversicherung : empirische Befunde zum Versicherungspflichtverhältnis auf Antrag," IAB-Forschungsbericht 201315, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Stefan Bender & Nicholas Bloom & David Card & John Van Reenen & Stefanie Wolter, 2018. "Management Practices, Workforce Selection, and Productivity," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 371-409.
    10. Sara Rica & Yolanda F. Rebollo-Sanz, 2017. "Gender Differentials in Unemployment Ins and Outs during the Great Recession in Spain," De Economist, Springer, vol. 165(1), pages 67-99, March.
    11. Petrunyk, Inna & Pfeifer, Christian, 2018. "Shortening the Potential Duration of Unemployment Benefits and Labor Market Outcomes: Evidence from a Natural Experiment in Germany," IZA Discussion Papers 11300, Institute of Labor Economics (IZA).
    12. Anna Manzoni & Irma Mooi-Reci, 2020. "The cumulative disadvantage of unemployment: Longitudinal evidence across gender and age at first unemployment in Germany," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-20, June.
    13. Le Barbanchon, Thomas, 2016. "The effect of the potential duration of unemployment benefits on unemployment exits to work and match quality in France," Labour Economics, Elsevier, vol. 42(C), pages 16-29.
    14. Joanne W. Hsu & David A. Matsa & Brian T. Melzer, 2014. "Positive Externalities of Social Insurance: Unemployment Insurance and Consumer Credit," NBER Working Papers 20353, National Bureau of Economic Research, Inc.
    15. Moritz Drechsel-Grau, 2023. "Employment and Reallocation Effects of Higher Minimum Wages," CESifo Working Paper Series 10412, CESifo.
    16. Gartner, Hermann & Rothe, Thomas & Weber, Enzo, 2019. "The Quality-Weighted Matching Function: Did the German Labour Market Reforms Trade off Efficiency against Job Quality?," IAB-Discussion Paper 201924, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    17. Wolfgang Dauth & Johann Eppelsheimer, 2020. "Preparing the sample of integrated labour market biographies (SIAB) for scientific analysis: a guide," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-14, December.
    18. Schmieder, Johannes F & Trenkle, Simon, 2020. "Disincentive effects of unemployment benefits and the role of caseworkers," Journal of Public Economics, Elsevier, vol. 182(C).
    19. Gibran da Silva Teixeira & Giácomo Balbinotto Neto & Pedro Henrique Soares Leivas, 2020. "Evidence on Rule Manipulation and Moral Hazard in the Brazilian Unemployment Insurance Program," International Journal of Social Science Studies, Redfame publishing, vol. 8(1), pages 67-78, January.
    20. De Groot, Nynke & van der Klaauw, Bas, 2014. "The Effects of Reducing the Entitlement Period to Unemployment Insurance Benefits," IZA Discussion Papers 8336, Institute of Labor Economics (IZA).
    21. Jahn, Elke & Stephan, Gesine, 2012. "Leistungsansprüche bei kurzen Beschäftigungszeiten: Arbeitslosengeld - wie lange man dafür arbeiten muss (Eligibility and short employment periods: How long does one have to work for unemployment bene," IAB-Kurzbericht 201219, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    22. repec:udt:wpecon:2016-03 is not listed on IDEAS
    23. Amanda M. Michaud, 2023. "Expanding Unemployment Insurance Coverage," Opportunity and Inclusive Growth Institute Working Papers 067, Federal Reserve Bank of Minneapolis.

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