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Unemployment duration and the interactions between unemployment insurance and social assistance

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  • Pellizzari, Michele

Abstract

The existing studies of unemployment benefit and unemployment duration suggest that reforms that lower either the level or the duration of benefits should reduce unemployment. Despite the large number of such reforms implemented in Europe in the past decades, this paper presents evidence that shows no correlation between the reforms and the evolution of unemployment. This paper also provides an explanation for this fact by exploring the interactions between unemployment benefits and social assistance programmes. Unemployed workers who are also eligible, or expect to become eligible, for some social assistance programmes are less concerned about their benefits being reduced or terminated. They will not search particularly intensively around the time of benefit exhaustion nor will come particularly less choosy about job offers by reducing their reservation wages. Data from the European Community Household Panel (ECHP) are used to provide evidence to support this argument. Results show that, in fact, for social assistance recipients the probability of finding a job is not particularly higher during the last months of entitlement.
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  • Pellizzari, Michele, 2006. "Unemployment duration and the interactions between unemployment insurance and social assistance," Labour Economics, Elsevier, vol. 13(6), pages 773-798, December.
    • Handle: RePEc:eee:labeco:v:13:y:2006:i:6:p:773-798
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    1. Ortega, Javier & Rioux, Laurence, 2010. "On the extent of re-entitlement effects in unemployment compensation," Labour Economics, Elsevier, vol. 17(2), pages 368-382, April.
    2. Lars Pico Geerdsen & Stéphanie Vincent Lyk-Jensen & Cecilie Dohlmann Weatherall, 2018. "Accelerating the transition to employment at benefit exhaustion: still possible after four years of unemployment?," Empirical Economics, Springer, vol. 54(3), pages 1107-1135, May.
    3. 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, vol. 97(2), pages 113-118, May.
    4. Inna Petrunyk & Christian Pfeifer, 2022. "Diverse effects of shorter potential unemployment benefit duration on labor market outcomes in Germany," LABOUR, CEIS, vol. 36(3), pages 367-388, September.
    5. Matthew S. Rutledge, 2011. "The Impact of Unemployment Insurance Extensions on Disability Insurance Application and Allowance Rates," Working Papers, Center for Retirement Research at Boston College wp2011-17, Center for Retirement Research, revised Oct 2011.
    6. Bargain, Olivier & Orsini, Kristian, 2006. "In-work policies in Europe: Killing two birds with one stone?," Labour Economics, Elsevier, vol. 13(6), pages 667-697, December.
    7. Caroline Hall, 2011. "Do Interactions between Unemployment Insurance and Sickness Insurance Affect Transitions to Employment?," LABOUR, CEIS, vol. 25(4), pages 447-467, December.
    8. Florent Fremigacci, 2010. "Maximum Benefits Duration and Older Workers’Transitions out of Unemployment : a Regression Discontinuity Approach," Documents de recherche 10-12, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    9. Tomi Kyyrä & Ralf Wilke, 2014. "On the reliability of retrospective unemployment information in European household panel data," Empirical Economics, Springer, vol. 46(4), pages 1473-1493, June.
    10. Aysit Tansel & H. Mehmet Taşçı, 2010. "Hazard Analysis of Unemployment Duration by Gender in a Developing Country: The Case of Turkey," LABOUR, CEIS, vol. 24(4), pages 501-530, December.
    11. Baguelin, Olivier & Remillon, Delphine, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Labour Economics, Elsevier, vol. 30(C), pages 245-264.
    12. Wang, Jinxian & Van Vliet, Olaf, 2014. "Social assistance and minimum income benefits: Benefit levels, replacement rates and policies across 33 countries, 1990-2009," MPRA Paper 66464, University Library of Munich, Germany.
    13. de Groot, Nynke & van der Klaauw, Bas, 2019. "The effects of reducing the entitlement period to unemployment insurance benefits," Labour Economics, Elsevier, vol. 57(C), pages 195-208.
    14. Inna Petrunyk & Christian Pfeifer, 2018. "Shortening the potential duration of unemployment benefits and labor market outcomes: Evidence from a natural experiment in Germany," Working Paper Series in Economics 377, University of Lüneburg, Institute of Economics.
    15. Stephen Whelan, 2010. "The Interaction between Income Support Programs," LABOUR, CEIS, vol. 24(4), pages 407-440, December.
    16. Hock-Eam Lim, 2011. "The Determinants Of Individual Unemployment Duration: The Case Of Malaysian Graduates," Journal of Global Management, Global Research Agency, vol. 2(2), pages 184-203, July.
    17. Tolciu, Andreia, 2008. "Is unemployment a consequence of social interactions? Seeking for a common research framework for economists and other social scientists," HWWI Research Papers 1-15, Hamburg Institute of International Economics (HWWI).
    18. Lorenzo Corsini, 2011. "On Wealth, Unemployment Benefits and Unemployment Duration: some Evidence from Italy," Discussion Papers 2011/119, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    19. Christian Schmitt, 2008. "Gender-Specific Effects of Unemployment on Family Formation: A Cross-National Perspective," Discussion Papers of DIW Berlin 841, DIW Berlin, German Institute for Economic Research.
    20. Christian Glocker, 2012. "Unemployment compensation and aggregate fluctuations," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 59(1), pages 21-39, March.
    21. Henningsen, Morten, 2008. "Benefit shifting: The case of sickness insurance for the unemployed," Labour Economics, Elsevier, vol. 15(6), pages 1238-1269, December.

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