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Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France

Author

Listed:
  • Olivier Baguelin

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Delphine Remillon

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

In a context of population aging, reducing early exit from the labor force is a major challenge. In this domain, the role of unemployment insurance (UI) is probably underestimated and its statistical assessment remains insufficient. And yet, when considering a possible separation, it is likely that workers who are close to retirement, and thus their employers if they wish to reduce their workforce, care about UI. In particular, they are likely to care about whether or not, potential benefit duration is long enough to cover the time until retirement. This paper provides evidence in support of this hypothesis for some worker profiles. The analysis is conducted using data from the French employment agency over the period 2001 to 2005. It is based on a natural experiment: on January 1, 2003, the potential benefit duration of UI entrants was sharply reduced. Econometric analysis of the age patterns of UI inflow reveals that the age incentives provided by UI rules greatly influence labor market behaviors: dismissals of insiders close to retirement are often scheduled so that they can receive benefits until retirement. We estimate that the reform increased the mean age at job termination of workers dismissed close to retirement by 4months. Our findings confirm that UI rules have an impact on inflow into unemployment and that UI is viewed by some employers and/or some workers as an early retirement scheme rather than as insurance against the risk of job loss. Thus, addressing the issue of older workers' participation in the labor market requires consideration of the joint impact of UI and retirement system rules.
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Suggested Citation

  • Olivier Baguelin & Delphine Remillon, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Post-Print hal-02541396, HAL.
    • Handle: RePEc:hal:journl:hal-02541396
    DOI: 10.1016/j.labeco.2014.04.005
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    Citations

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    Cited by:

    1. Nathalie Greenan & Pierre-Jean Messe, 2018. "Transmission of vocational skills in the second part of careers: the effect of ICT and management changes," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-16, December.
    2. Conny Wunsch & Véra Zabrodina, 2023. "Unemployment Insurance with Response Heterogeneity," CESifo Working Paper Series 10704, CESifo.
    3. Jessen, Jonas & Jessen, Robin & Galecka-Burdziak, Ewa & Góra, Marek & Kluve, Jochen, 2023. "The Micro and Macro Effects of Changes in the Potential Benefit Duration," IZA Discussion Papers 15978, Institute of Labor Economics (IZA).
    4. Nathalie Greenan & Pierre-Jean Messe, 2018. "Transmission of vocational skills in the second part of careers: the effect of ICT and management changes," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 52(1), pages 1-16, December.
    5. Laura Khoury & Clément Brébion & Simon Briole, 2019. "Entitled to Leave: the Impact of Unemployment Insurance Eligibility on Employment Duration and Job Quality," Working Papers halshs-02393383, HAL.
    6. Kyyrä, Tomi & Pesola, Hanna, 2020. "Long-term effects of extended unemployment benefits for older workers," Labour Economics, Elsevier, vol. 62(C).
    7. Kruse, Herman & Myhre, Andreas, 2021. "Early Retirement Provision for Elderly Displaced Workers," MPRA Paper 118689, University Library of Munich, Germany, revised 21 Sep 2023.
    8. Octave Brouwer & Ilan Tojerow, 2024. "Old-age unemployment and labour supply: an application to Belgium," Empirical Economics, Springer, vol. 67(1), pages 253-287, July.
    9. Laura Khoury, 2021. "Unemployment Benefits and the Timing of Redundancies," Working Papers halshs-02057145, HAL.
    10. Albanese, Andrea & Picchio, Matteo & Ghirelli, Corinna, 2020. "Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs?," Labour Economics, Elsevier, vol. 65(C).
    11. Galecka-Burdziak, Ewa & Góra, Marek & Jessen, Jonas & Jessen, Robin & Kluve, Jochen, 2021. "The Effects of Shortening Potential Benefit Duration: Evidence from Regional Cut-Offs and a Policy Reform," IZA Discussion Papers 14340, Institute of Labor Economics (IZA).
    12. Thomas Le Barbanchon & Johannes F. Schmieder & Andrea Weber, 2024. "Job Search, Unemployment Insurance, and Active Labor Market Policies," NBER Working Papers 32720, National Bureau of Economic Research, Inc.
    13. repec:iab:iabjlr:v:52:i:1:p:art.6 is not listed on IDEAS
    14. Laura Khoury, 2019. "Unemployment Benefits and the Timing of Redundancies: Evidence from Bunching," PSE Working Papers halshs-02057145, HAL.
    15. Yashiro, Naomitsu & Kyyrä, Tomi & Hwang, Hyunjeong & Tuomala, Juha, 2020. "Technology, Labour Market Institutions and Early Retirement: Evidence from Finland," IZA Discussion Papers 13990, Institute of Labor Economics (IZA).
    16. Arranz, José M. & García-Serrano, Carlos, 2020. "Does unemployment benefit duration affect inflows into unemployment? The impact of a law change for older workers," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    17. repec:hal:journl:hal-04455608 is not listed on IDEAS
    18. Anne LAMBERT & Delphine REMILLON & Mariona SEGÚ, 2023. "Getting out or switching to part‐time: Gender disparities in the impacts of corporate restructuring," International Labour Review, International Labour Organization, vol. 162(4), pages 537-560, December.
    19. Sarah Le Duigou & Pierre-Jean Messe, 2024. "The influence of unemployment insurance rules on employment effects of pension reforms," Post-Print hal-04814517, HAL.
    20. Bengtsson, Mats & König, Stefanie & Schönbeck, Simon & Wadensjö, Eskil, 2022. "Leaving the Labor Market Early in Sweden – Learning from International Experience," IZA Discussion Papers 15327, Institute of Labor Economics (IZA).
    21. Kruse, Herman & Myhre, Andreas S., 2025. "Early retirement provision for elderly displaced workers," The Journal of the Economics of Ageing, Elsevier, vol. 31(C).
    22. Olivier Baguelin, 2016. "Dismissals scheduling and the employment of older workers," Economics Bulletin, AccessEcon, vol. 36(4), pages 2443-2453.
    23. Khoury, Laura, 2023. "Unemployment benefits and redundancies: Incidence and timing effects," Journal of Public Economics, Elsevier, vol. 226(C).
    24. Kruse, Herman & Myhre, Andreas, 2021. "Early Retirement Provision for Elderly Displaced Workers," MPRA Paper 109431, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • 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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