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Benefit Duration and Unemployment Entry: Quasi-experimental Evidence for Austria

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  • Winter-Ebmer, Rudolf

Abstract

This paper studies the impact of a selective extension of unemployment benefit duration on the incidence of unemployment in Austria. As the new law applies only to elderly workers in certain regions of the country after June 1988, a quasi-experimental situation is created. Unemployment entry is found to rise by between four and eleven percentage points due to the new law. The findings are explained by a breach of an implicit contract; elderly workers receive wages above their marginal product in order to elicit higher effort. Dismissal of elderly workers is now easier because more generous unemployment insurance makes reputation loss for the firm less severe.

Suggested Citation

  • Winter-Ebmer, Rudolf, 1996. "Benefit Duration and Unemployment Entry: Quasi-experimental Evidence for Austria," CEPR Discussion Papers 1521, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1521
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    Citations

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    Cited by:

    1. Rudolf Winter-Ebmer & Josef Zweimüller, 1999. "Do immigrants displace young native workers: The Austrian experience," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(2), pages 327-340.
    2. Rudolf Winter-Ebmer, 2000. "Long-term consequences of an innovative redundancy-retraining project: The Austrian Steel Foundation," Economics working papers 2000-29, Department of Economics, Johannes Kepler University Linz, Austria.
    3. Rafael Lalive & Camille Landais & Josef Zweimüller, 2015. "Market Externalities of Large Unemployment Insurance Extension Programs," American Economic Review, American Economic Association, vol. 105(12), pages 3564-3596, December.
    4. Mario Schnalzenberger & Rudolf Winter-Ebmer, 2008. "Layoff Tax and the Employment of the Elderly," NRN working papers 2008-04, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
    5. Lalive, Rafael & Zweimuller, Josef, 2004. "Benefit entitlement and unemployment duration: The role of policy endogeneity," Journal of Public Economics, Elsevier, vol. 88(12), pages 2587-2616, December.
    6. Konstantinos Tatsiramos & Jan C. Ours, 2014. "Labor Market Effects Of Unemployment Insurance Design," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 284-311, April.
    7. Rafael Lalive & Jan Ours & Josef Zweimüller, 2011. "Equilibrium unemployment and the duration of unemployment benefits," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1385-1409, October.
    8. Rafael Lalive & Josef Zweim�ller, "undated". "Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change," IEW - Working Papers 105, Institute for Empirical Research in Economics - University of Zurich.
    9. Winter-Ebmer, Rudolf, 2001. "Evaluating an Innovative Redundancy-Retraining Project: The Austrian Steel Foundation," IZA Discussion Papers 277, Institute for the Study of Labor (IZA).
    10. Dar, Amit & Tzannatos, Zafiris, 1999. "Active labor market programs: a review of the evidence from evaluations," Social Protection and Labor Policy and Technical Notes 20116, The World Bank.
    11. Schnalzenberger, Mario & Winter-Ebmer, Rudolf, 2009. "Layoff tax and employment of the elderly," Labour Economics, Elsevier, vol. 16(6), pages 618-624, December.

    More about this item

    Keywords

    Elderly Workers; Implicit Contracts; Unemployment Entry; Unemployment Insurance;

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • 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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