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Accelerating the transition to employment at benefit exhaustion: still possible after four years of unemployment?

Author

Listed:
  • Lars Pico Geerdsen

    (Kraks Fond Institute for Urban Economic Research)

  • Stéphanie Vincent Lyk-Jensen

    (SFI - The Danish National Centre for Social Research)

  • Cecilie Dohlmann Weatherall

    (Kraks Fond Institute for Urban Economic Research)

Abstract

This paper provides evidence of how the long-term unemployed react to the threat of running out of unemployment insurance (UI) after receiving it for nearly 4 years. To identify the effect of UI exhaustion, we make use of a 1999 Danish legislative change that progressively reduced potential benefit duration from 5 to 4 years. We find that shortening UI duration hastens the transition to employment throughout the unemployment spell up to benefit exhaustion even if it occurs as long as 4 years later. However, although the proportional effect is large, it is small in absolute value.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:empeco:v:54:y:2018:i:3:d:10.1007_s00181-017-1236-3
    DOI: 10.1007/s00181-017-1236-3
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    2. Kyyrä, Tomi & Pesola, Hanna & Verho, Jouko, 2017. "The spike at benefit exhaustion in the Finnish labor market," Working Papers 86, VATT Institute for Economic Research.

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    More about this item

    Keywords

    Unemployment duration; Benefit entitlement; Unemployment insurance; UI exhaustion; Shortening of UI;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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