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Does an increase in unemployment income lead to longer unemployment spells? Evidence using Danish unemployment assistance data

Author

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  • Ott Toomet

    () (Department of Economics, University of Aarhus, Denmark)

Abstract

Danish unemployment assistance depends on age; it increases by 70% when unemployed individuals turn 25. This feature is used to identify the impact of income on the unemployment-to-employment hazard rate. A mixed proportional hazard framework based on a 10% representative Danish registry data set is used. The results indicate that the income effect for females is negative and significant, corresponding to an income elasticity of -0.4. The effect for males is positive but insignifcant.

Suggested Citation

  • Ott Toomet, 2005. "Does an increase in unemployment income lead to longer unemployment spells? Evidence using Danish unemployment assistance data," Economics Working Papers 2005-07, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2005-07
    as

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    File URL: ftp://ftp.econ.au.dk/afn/wp/05/wp05_07.pdf
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    References listed on IDEAS

    as
    1. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-782, July.
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    5. Bratberg, Espen & Vaage, Kjell, 2000. "Spell durations with long unemployment insurance periods," Labour Economics, Elsevier, vol. 7(2), pages 153-180, March.
    6. Brinch,C., 2000. "Identification of structural duration dependence and unobserved heterogeneity with time-varying," Memorandum 20/2000, Oslo University, Department of Economics.
    7. Bolvig, Iben & Jensen, Peter & Rosholm, Michael, 2003. "The Employment Effects of Active Social Policy," IZA Discussion Papers 736, Institute for the Study of Labor (IZA).
    8. Micklewright, John & Nagy, Gyula, 1999. "Living standards and incentives in transition: the implications of UI exhaustion in Hungary," Journal of Public Economics, Elsevier, vol. 73(3), pages 297-319, September.
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    More about this item

    Keywords

    welfare benefts; incentive effect; unemployment duration;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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