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Do Benefit Hikes Damage Job Finding? Evidence from Swedish Unemployment Insurance Reforms

Author

Listed:
  • Bennmarker, Helge

    () (Institute for Labour Market Policy Evaluation)

  • Carling, Kenneth

    () (Institute for Labour Market Policy Evaluation)

  • Holmlund, Bertil

    () (Department of Economics)

Abstract

In 2001 and 2002, Sweden introduced several unemployment insurance reforms. A major innovation in the first reform was the introduction of a two-tiered benefit structure for some unemployed individuals. This system involved supplementary compensation during the first 20 weeks of unemployment. The 2002 reform retained the two-tiered benefit structure but involved also substantial benefit hikes for spells exceeding 20 weeks. This paper examines how these reforms affected transitions from unemployment to employment. We take advantage of the fact that the reforms had quasi-experimental features where the “treatments” differed considerably among unemployed individuals. We find that the reforms had strikingly different effects on job finding among men and women. The two reforms in conjunction are estimated to have increased the expected duration of unemployment among men but to have decreased the duration of unemployment among women. The overall effect on the duration of unemployment is not statistically different from zero. However, the reforms reduced job finding among males who remained unemployed for more than 20 weeks.

Suggested Citation

  • 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.
  • Handle: RePEc:hhs:uunewp:2005_015
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    References listed on IDEAS

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    1. Carling, Kenneth & Holmlund, Bertil & Vejsiu, Altin, 2001. "Do Benefit Cuts Boost Job Finding? Swedish Evidence from the 1990s," Economic Journal, Royal Economic Society, vol. 111(474), pages 766-790, October.
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    Cited by:

    1. Doris, Aedin & O'Neill, Donal & Sweetman, Olive, 2017. "Does Reducing Unemployment Benefits During a Recession Reduce Youth Unemployment? Evidence from a 50% Cut in Unemployment Assistance," IZA Discussion Papers 10727, Institute for the Study of Labor (IZA).
    2. Gerard J. Berg & Johan Vikström, 2014. "Monitoring Job Offer Decisions, Punishments, Exit to Work, and Job Quality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(2), pages 284-334, April.
    3. Bergemann, Annette & van den Berg, Gerard J., 2008. "From Giving Birth to Paid Labor: The Effects of Adult Education for Prime-Aged Mothers," IZA Discussion Papers 3600, Institute for the Study of Labor (IZA).
    4. Per Engstrom & Bertil Holmlund, 2009. "Tax evasion and self-employment in a high-tax country: evidence from Sweden," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2419-2430.
    5. Vikman, Ulrika, 2010. "Does Providing Childcare to Unemployed Affect Unemployment Duration?," Working Paper Series, Center for Fiscal Studies 2010:6, Uppsala University, Department of Economics.
    6. repec:pri:cepsud:158krueger is not listed on IDEAS
    7. Hallberg, Daniel, 2006. "Cross-national differences in income poverty among Europe´s 50+," Working Paper Series 2006:14, Uppsala University, Department of Economics.
    8. Johansson, Fredrik & Klevmarken, Anders, 2006. "Explaining the size and nature of response in a survey on health status and economic standard," Working Paper Series 2006:2, Uppsala University, Department of Economics.
    9. Martin Gonzalez Eiras & Dirk Niepelt, 2004. "Sustaining Social Security," Working Papers 72, Universidad de San Andres, Departamento de Economia, revised Jun 2004.
    10. Anton Nilsson, 2015. "Who suffers from unemployment? The role of health and skills," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-24, December.
    11. Costain, James S. & Reiter, Michael, 2008. "Business cycles, unemployment insurance, and the calibration of matching models," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1120-1155, April.
    12. 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.
    13. Anders Forslund & Alan Krueger, 2010. "Did Active Labor Market Policies Help Sweden Rebound from the Depression of the Early 1990s?," NBER Chapters,in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 159-187 National Bureau of Economic Research, Inc.
    14. Uusitalo, Roope & Verho, Jouko, 2007. "The effect of unemployment benefits on re-employment rates: evidence from the Finnish UI-benefit reform," Working Paper Series 2007:21, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    15. Berg, Lennart & Berger, Tommy, 2005. "The Q theory and the Swedish housing market –an empirical test," Working Paper Series 2005:19, Uppsala University, Department of Economics.
    16. Rosholm, Michael & Vejlin, Rune, 2010. "Reducing income transfers to refugee immigrants: Does start-help help you start?," Labour Economics, Elsevier, vol. 17(1), pages 258-275, January.
    17. Emmanuel Duguet & Florent Frémigacci & Yannick L’Horty, 2008. "Indemnisation du chômage et retour à l’emploi : un examen économétrique," Documents de recherche 08-07, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    18. Uusitalo, Roope & Verho, Jouko, 2010. "The effect of unemployment benefits on re-employment rates: Evidence from the Finnish unemployment insurance reform," Labour Economics, Elsevier, vol. 17(4), pages 643-654, August.
    19. Erixon, Lennart, 2011. "Under the influence of traumatic events, new ideas, economic experts and the ICT revolution - the economic policy and macroeconomic performance of Sweden in the 1990s and 2000s," Research Papers in Economics 2011:25, Stockholm University, Department of Economics.
    20. Nordlund, Madelende & Strandh, Mattias, 2014. "The relation between economic and non-economic incentives to work and employment chances among the unemployed," Working Paper Series 2014:23, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    Keywords

    Unemployment duration; Unemployment benefits;

    JEL classification:

    • 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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