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Unemployment Insurance and the Duration of Employment: Theory and Evidence from a Regression Kink Design

Author

Listed:
  • Diogo Britto

    () (Università Cattolica del Sacro Cuore
    Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)

Abstract

Can unemployment insurance (UI) affect the behavior of employed workers and the duration of their employment spells? I apply a regression kink design to address this question using data from the Brazilian labor market. Exploiting the UI schedule, I find that a 1% higher potential benefit level increases job duration by around 0.35%. This result is driven by the fact that a higher potential benefit level reduces the probability of job quits, which are not covered by UI. I develop a simple model showing that the positive effect on employment duration implies that the optimal benefit is higher than otherwise and delivers a simple welfare formula based on sufficient statistics. A simple calibration exercise shows that this elasticity affects welfare with a similar magnitude as the well-known elasticity of unemployment duration to the benefit level.

Suggested Citation

  • Diogo Britto, 2016. "Unemployment Insurance and the Duration of Employment: Theory and Evidence from a Regression Kink Design," DISCE - Working Papers del Dipartimento di Economia e Finanza def048, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  • Handle: RePEc:ctc:serie1:def048
    as

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    File URL: http://dipartimenti.unicatt.it/economia-finanza-def048.pdf
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Sebastiano Della Lena & Fabrizio Panebianco, 2019. "Cultural Transmission with Incomplete Information: Parental Perceived Efficacy and Group Misrepresentation," DISCE - Working Papers del Dipartimento di Economia e Finanza def079, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    2. Rosario Crinò & Giovanni Immordino & Salvatore Piccolo, 2018. "Fighting Mobile Crime," DISCE - Working Papers del Dipartimento di Economia e Finanza def071, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    3. Michele Tettamanzi, 2017. "E Many Pluribus Unum: A Behavioural Macro-Economic Agent Based Model," DISCE - Working Papers del Dipartimento di Economia e Finanza def062, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    4. repec:bpj:bejeap:v:17:y:2017:i:3:p:20:n:6 is not listed on IDEAS
    5. Cottini Elena & Ghinetti Paolo, 2017. "Is it the Way You Live or the Job You Have? Health Effects of Lifestyles and Working Conditions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 17(3), pages 1-20, July.
    6. Russell Davidson & Andrea Monticini, 2018. "Improvements in Bootstrap Inference," DISCE - Working Papers del Dipartimento di Economia e Finanza def070, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    7. Elenka Brenna & Lara Gitto, 2018. "Adult education, the use of Information and Communication Technologies and the impact on quality of life: a case study," DISCE - Working Papers del Dipartimento di Economia e Finanza def073, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

    More about this item

    Keywords

    Unemployment Insurance; Employment Duration; Regression Kink Design; Sufficient Statistics Welfare Analysis.;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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