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Frontloading the Unemployment Benefit: An Empirical Assessment

Author

Listed:
  • Attila Lindner

    () (University College London, CERS-HAS, IZA, IFS)

  • Balazs Reizer

    () (PhD student at the Central European University)

Abstract

In November 2005, the Hungarian government frontloaded the unemployment benefit path, while kept constant the total benefit amount that could be collected over the unemployment spell. We estimate the effect of this reform on non-employment duration using an interrupted time series design. We find that non-employment duration fell by 1.5 weeks after November 2005, while reemployment wages and the duration of new jobs remained the same. We show that the decrease in non-employment duration was large enough to make the benefit reform revenue neutral. Our welfare evaluation for this reform is positive: frontloading increased job finding, it made some of the unemployed better off, and did not cost anything to the taxpayers.

Suggested Citation

  • Attila Lindner & Balazs Reizer, 2016. "Frontloading the Unemployment Benefit: An Empirical Assessment," IEHAS Discussion Papers 1627, Institute of Economics, Centre for Economic and Regional Studies.
  • Handle: RePEc:has:discpr:1627
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    References listed on IDEAS

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    5. Cahuc, Pierre & Lehmann, Etienne, 2000. "Should unemployment benefits decrease with the unemployment spell?," Journal of Public Economics, Elsevier, vol. 77(1), pages 135-153, July.
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    7. Rafael Lalive, 2007. "Unemployment Benefits, Unemployment Duration, and Post-Unemployment Jobs: A Regression Discontinuity Approach," American Economic Review, American Economic Association, vol. 97(2), pages 108-112, May.
    8. van Ours, Jan C. & Vodopivec, Milan, 2008. "Does reducing unemployment insurance generosity reduce job match quality?," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 684-695, April.
    9. Arash Nekoei & Andrea Weber, 2017. "Does Extending Unemployment Benefits Improve Job Quality?," American Economic Review, American Economic Association, vol. 107(2), pages 527-561, February.
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    11. Kolsrud, Jonas & Landais, Camille & Nilsson, Peter & Spinnewijn, Johannes, 2015. "The Optimal Timing of UI Benefits: Theory and Evidence from Sweden," CEPR Discussion Papers 10701, C.E.P.R. Discussion Papers.
    12. Raj Chetty, 2008. "Moral Hazard versus Liquidity and Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 173-234, April.
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    17. Stefano DellaVigna & Attila Lindner & Balázs Reizer & Johannes F. Schmieder, 2017. "Reference-Dependent Job Search: Evidence from Hungary," The Quarterly Journal of Economics, Oxford University Press, vol. 132(4), pages 1969-2018.
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    Cited by:

    1. repec:eee:pubeco:v:165:y:2018:i:c:p:82-100 is not listed on IDEAS
    2. Peter Ganong & Pascal J. Noel, 2019. "Consumer Spending During Unemployment: Positive and Normative Implications," NBER Working Papers 25417, National Bureau of Economic Research, Inc.
    3. Peter Ganong & Pascal Noel, 2019. "Consumer Spending During Unemployment: Positive and Normative Implications," Working Papers 2019-006, Human Capital and Economic Opportunity Working Group.

    More about this item

    Keywords

    unemployment; declining unemployment benefits; welfare analysis;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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