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Maximum Benefits Duration and Older Workers’Transitions out of Unemployment : a Regression Discontinuity Approach

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  • Florent Fremigacci

    () (EPEE, Université d’Evry-Val-d’Essonne)

Abstract

This paper investigates the relationship between the length of Unemployment Insurance (UI) entitlement and transitions out of unemployment. Our focus is on older job seekers who usually access to longer benefit periods and may withdraw from the labour force via early retirement. We exploit the 2003 reform of the French UI system that involved substantial cuts in benefits for this specific group. The design of the reform naturally leads us to adopt a Regression Discontinuity framework, comparing the search behaviour of people who became unemployed just before and after the policy change. We account for seasonal factors by taking advantage of pre and post reform cohorts and thus combining the standard RD framework with a Difference-in-Differences strategy. Our empirical analysis reveals that the reform had a structural impact on the distribution of unemployment durations, which shifted downwards in response to benefits cuts. This adjustment mainly operated through the displacement of job seekers from unemployment insurance to unemployment assistance, which largely contributes to explaining the observed spikes in exits from unemployment around the benefit exhaustion date. The effect on transitions to employment was on the contrary quite modest, while the subsequent job stability remained unaffected by the reform

Suggested Citation

  • Florent Fremigacci, 2010. "Maximum Benefits Duration and Older Workers’Transitions out of Unemployment : a Regression Discontinuity Approach," Documents de recherche 10-12, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  • Handle: RePEc:eve:wpaper:10-12
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    File URL: http://epee.univ-evry.fr/RePEc/2010/10-12.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Baguelin, Olivier & Remillon, Delphine, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Labour Economics, Elsevier, vol. 30(C), pages 245-264.
    2. Le Barbanchon, Thomas, 2016. "The effect of the potential duration of unemployment benefits on unemployment exits to work and match quality in France," Labour Economics, Elsevier, vol. 42(C), pages 16-29.
    3. Anne Sonnet & Hilde Olsen & Thomas Manfredi, 2014. "Towards More Inclusive Ageing and Employment Policies: The Lessons from France, The Netherlands, Norway and Switzerland," De Economist, Springer, vol. 162(4), pages 315-339, December.
    4. Petrunyk, Inna & Pfeifer, Christian, 2018. "Shortening the Potential Duration of Unemployment Benefits and Labor Market Outcomes: Evidence from a Natural Experiment in Germany," IZA Discussion Papers 11300, Institute for the Study of Labor (IZA).
    5. Inna Petrunyk & Christian Pfeifer, 2018. "Shortening the potential duration of unemployment benefits and labor market outcomes: Evidence from a natural experiment in Germany," Working Paper Series in Economics 377, University of Lüneburg, Institute of Economics.

    More about this item

    Keywords

    Unemployment Insurance; Older Workers; Regression Discontinuity; Difference-in- Differences.;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • 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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