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Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes

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  • Gerard Domènech-Arumí
  • Silvia Vannutelli

Abstract

We exploit an unanticipated labor market reform in 2012 Spain to estimate the effects of pro-cyclical changes in long-term unemployment assistance (UA). The reform raised the minimum age to receive unlimited-duration UA from 52 to 55. Using a dfference-in-differences design, we document that shorter benefits caused (i) shorter non-employment duration, especially among younger workers; (ii) higher labor force exit and other programs' take-up, especially among older workers; (iii) lower reemployment wages. The reform induced moderate government savings. Our results highlight how considering the interplay with labor market conditions is crucial when designing long-term beneffit schedules affecting workers close to retirement.

Suggested Citation

  • Gerard Domènech-Arumí & Silvia Vannutelli, 2022. "Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes," Working Papers ECARES 2022-24, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/348471
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    Keywords

    Unemployment; Unemployment Insurance; Wages;
    All these keywords.

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