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Benefit Duration, Job Search Behavior and Re-Employment

Author

Listed:
  • Andreas Lichter

  • Amelie Schiprowski

Abstract

This paper studies how the potential duration of unemployment benefits affects early job search behavior and re-employment outcomes. We exploit an unexpected reform of the German unemployment insurance (UI) scheme in 2008, which increased the potential benefit duration from 12 to 15 months for benefit recipients of age 50 to 54. Based on detailed survey data and a difference-in-differences design, we estimate that one additional month of potential benefits reduces early job applications by around 10%. Using social security data, we further find that the extension of benefits increases the average nonemployment duration of individuals entering UI after the reform. Among individuals who got treated at later stages of their unemployment spell, the increased UI coverage does not appear to come at the cost of longer nonemployment. A cautious back-of-the-envelope calculation reveals substantial job finding returns to early search effort.

Suggested Citation

  • Andreas Lichter & Amelie Schiprowski, 2020. "Benefit Duration, Job Search Behavior and Re-Employment," CRC TR 224 Discussion Paper Series crctr224_2020_164v2, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2020_164v2
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp164
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    Cited by:

    1. Marinescu, Ioana & Skandalis, Daphné & Zhao, Daniel, 2021. "The impact of the Federal Pandemic Unemployment Compensation on job search and vacancy creation," Journal of Public Economics, Elsevier, vol. 200(C).
    2. Niklas Gohl, 2023. "Working Longer, Working Stronger? The Forward-Looking Effects of Increasing the Retirement Age on (Un)employment Behaviour," Berlin School of Economics Discussion Papers 0013, Berlin School of Economics.
    3. Altmann, Steffen & Cairo, Sofie & Mahlstedt, Robert & Sebald, Alexander, 2022. "Do Job Seekers Understand the UI Benefit System (And Does It Matter)?," IZA Discussion Papers 15747, IZA Network @ LISER.
    4. Niklas Gohl, 2023. "Working Longer, Working Stronger? The Forward-Looking Effects of Increasing the Retirement Age on (Un)employment Behaviour," CEPA Discussion Papers 63, Center for Economic Policy Analysis.
    5. Camarero Garcia, Sebastian & Murmann, Martin, 2020. "Unemployment benefit duration and startup success," ZEW Discussion Papers 20-033, ZEW - Leibniz Centre for European Economic Research.
    6. Carmen Valentina Radulescu & Georgiana-Raluca Ladaru & Sorin Burlacu & Florentina Constantin & Corina Ioanăș & Ionut Laurentiu Petre, 2020. "Impact of the COVID-19 Pandemic on the Romanian Labor Market," Sustainability, MDPI, vol. 13(1), pages 1-23, December.
    7. Balgová, Mária & Trenkle, Simon & Zimpelmann, Christian & Pestel, Nico, 2022. "Job search during a pandemic recession: Survey evidence from the Netherlands," Labour Economics, Elsevier, vol. 75(C).
    8. Kai Fischer, 2024. "Alcohol Prohibition and Pricing at the Pump," Journal of Industrial Economics, Wiley Blackwell, vol. 72(1), pages 548-597, March.
    9. Amelie Schiprowski & Julia Schmidtke & Johannes Schmieder & Simon Trenkle, 2024. "The Effects of UI Caseworkers on Job Search Effort," CRC TR 224 Discussion Paper Series crctr224_2024_497, University of Bonn and University of Mannheim, Germany.
    10. Gregor, Leonard & Haucap, Justus, 2025. "The rise of refinery margins: The case of energy tax cut in Germany," DICE Discussion Papers 431, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    11. Marta C. Lopes, 2022. "A review on the elasticity of unemployment duration to the potential duration of unemployment benefits," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1212-1224, September.
    12. Stefano Della & Jörg Heining & Johannes F Schmieder & Simon Trenkle, 2022. "Evidence on Job Search Models from a Survey of Unemployed Workers in Germany [Reference-Dependent Preferences: Evidence from Marathon Runners]," The Quarterly Journal of Economics, Oxford University Press, vol. 137(2), pages 1181-1232.
    13. Ben Deaner & Hyejin Ku, 2024. "Causal Duration Analysis with Diff-in-Diff," Papers 2405.05220, arXiv.org.
    14. Jonas Fluchtmann & Anita M. Glenny & Nikolaj Harmon & Jonas Maibom, 2024. "Unemployed Job Search across People and over Time: Evidence from Applied-For Jobs," Journal of Labor Economics, University of Chicago Press, vol. 42(4), pages 1175-1217.
    15. Sebastian Camarero Garcia & Martin Murmann, 2025. "How unemployment benefit duration shapes startup motivation and growth," Small Business Economics, Springer, vol. 64(4), pages 1565-1600, April.
    16. Stefan Tübbicke, 2023. "How sensitive are matching estimates of active labor market policy effects to typically unobserved confounders?," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-16, December.

    More about this item

    Keywords

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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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