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Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity

  • Lalive, Rafael
  • Zweimüller, Josef

The potential duration of benefits is generally viewed as an important determinant of unemployment duration. This Paper evaluates a unique policy change that prolonged entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions of Austria. In the evaluation, we explicitly account for the fact that the programme was an endogenous policy response to a crisis affecting individuals with severe labour market problems. The main results are: (i) REBP reduced the transition rate to jobs by 17 %; (ii) accounting for endogenous policy adoption is important and quantitatively significant.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3363.

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Date of creation: May 2002
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Handle: RePEc:cpr:ceprdp:3363
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