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The effect of unemployment benefits on re-employment rates: evidence from the Finnish UI-benefit reform

  • Uusitalo, Roope

    ()

    (Labour Institute for Economic Research)

  • Verho, Jouko

    ()

    (Department of Economics, University of Helsinki)

In January 2003, the unemployment benefits in Finland were increased for workers with long employment histories. The average benefit increase was 15 per cent for the first 150 days of the unemployment spell. In this paper we evaluate the effect of the benefit increase on the duration of unemployment by comparing the changes in the re-employment hazard profiles among the unemployed who became eligible for the increased benefits to the changes in a comparison group whose benefit structure remained unchanged. We find that the benefit increase reduced the re-employment hazards at the beginning of the unemployment spell. The effect disappears after the eligibility period for the increased benefit expires.

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Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2007:21.

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Length: 36 pages
Date of creation: 20 Sep 2007
Date of revision:
Handle: RePEc:hhs:ifauwp:2007_021
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  1. Juha Kettunen, 1993. "Increasing incentives for reemployment," Finnish Economic Papers, Finnish Economic Association, vol. 6(1), pages 51-60, Spring.
  2. Lalive, Rafael & van Ours, Jan C. & Zweimüller, Josef, 2004. "How Changes in Financial Incentives Affect the Duration of Unemployment," IZA Discussion Papers 1363, Institute for the Study of Labor (IZA).
  3. Rafael Lalive & Josef Zweim�ller, . "Benefit Entitlement and Unemployment Duration - The Role of Policy Endogeneity," IEW - Working Papers 112, Institute for Empirical Research in Economics - University of Zurich.
  4. Bennmarker, Helge & Carling, Kenneth & Holmlund, Bertil, 2005. "Do Benefit Hikes Damage Job Finding? Evidence from Swedish Unemployment Insurance Reforms," Working Paper Series 2005:15, Uppsala University, Department of Economics.
  5. Bruce D. Meyer & Wallace K. C. Mok, 2007. "Quasi-Experimental Evidence on the Effects of Unemployment Insurance from New York State," NBER Working Papers 12865, National Bureau of Economic Research, Inc.
  6. Hakola, Tuulia & Uusitalo, Roope, 2005. "Not so voluntary retirement decisions? Evidence from a pension reform," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2121-2136, December.
  7. Card, David & Levine, Phillip B., 2000. "Extended benefits and the duration of UI spells: evidence from the New Jersey extended benefit program," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 107-138, October.
  8. Tomi Kyyrä, 1999. "Post-Unemployment Wages and Economic Incentives to Exit from Unemployment," Research Reports 56, Government Institute for Economic Research Finland (VATT).
  9. Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053.
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