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To search or not to search? The effects of UI benefit extension for the older unemployed

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  • Kyyrä, Tomi
  • Ollikainen, Virve

Abstract

In Finland the older unemployed can collect unemployment insurance benefits until retirement, while the entitlement period for younger groups is two years. In 1997 the eligibility age of persons benefiting from extended benefits was raised from 53 to 55. This paper takes advantage of this quasi-experimental setting to identify the effect of extended benefits on transitions out of unemployment among the older unemployed. We apply a competing risks version of a split population duration model to account for multiple exit routes and the possibility that some of the older unemployed may not be active in the labour market due to pension rules. Our finding is that roughly half of the unemployed with extended benefits withdraw from job search.

Suggested Citation

  • Kyyrä, Tomi & Ollikainen, Virve, 2008. "To search or not to search? The effects of UI benefit extension for the older unemployed," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2048-2070, October.
  • Handle: RePEc:eee:pubeco:v:92:y:2008:i:10-11:p:2048-2070
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Pekka Ilmakunnas & Seija Ilmakunnas, 2014. "Age segregation and hiring of older employees: low mobility revisited," International Journal of Manpower, Emerald Group Publishing, vol. 35(8), pages 1090-1115, October.
    2. Kyyrä, Tomi & Korkeamäki, Ossi, 2008. "A Distributional Analysis of Displacement Costs in an Economic Depression and Recovery," Discussion Papers 465, VATT Institute for Economic Research.
    3. Giesecke, Matthias & Kind, Michael, 2015. "Does Raising the Early Retirement Age Increase Reemployment of Older Unemployed Workers?," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113192, Verein für Socialpolitik / German Economic Association.
    4. 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.
    5. Lukas Inderbitzin & Stefan Staubli & Josef Zweimüller, 2016. "Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution," American Economic Journal: Economic Policy, American Economic Association, vol. 8(1), pages 253-288, February.
    6. Josef Zweimüller, 2018. "Unemployment insurance and the labor market," ECON - Working Papers 276, Department of Economics - University of Zurich.
    7. 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.
    8. Lichter, Andreas, 2016. "Benefit Duration and Job Search Effort: Evidence from a Natural Experiment," IZA Discussion Papers 10264, Institute for the Study of Labor (IZA).
    9. 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.
    10. Lammers, Marloes & Bloemen, Hans & Hochguertel, Stefan, 2013. "Job search requirements for older unemployed: Transitions to employment, early retirement and disability benefits," European Economic Review, Elsevier, vol. 58(C), pages 31-57.
    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 for the Study of Labor (IZA).
    12. Goldhaber, Dan & Krieg, John & Theobald, Roddy, 2014. "Knocking on the door to the teaching profession? Modeling the entry of prospective teachers into the workforce," Economics of Education Review, Elsevier, vol. 43(C), pages 106-124.

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