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Fixing the leak: Unemployment incidence before and after the 2006 reform of unemployment benefits in Germany

  • Dlugosz, Stephan
  • Stephan, Gesine


    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Wilke, Ralf A.

"From 2002 - 2004, the German government passed several laws that curtailed the generosity of the unemployment compensation system. One of the most ambitious changes was a considerable reduction in unemployment benefit entitlement lengths for older unemployed, which was effective during 2006 and 2007. We apply a difference-in-differences approach to show that the highly disputed reform induced a considerable decline in unemployment incidence among older workers. It thus sealed an important leak in the unemployment insurance system. Furthermore, we find a strong anticipation effect; unemployment entries of elderly workers peaked during the months preceding the reform." (Author's abstract, IAB-Doku) ((en))

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Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 200925.

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Length: 29 pages
Date of creation: 10 Dec 2009
Date of revision:
Publication status: published in: German Economic Review, Online First (2013), 24 p.
Handle: RePEc:iab:iabdpa:200925
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  1. Puhani, Patrick A., 2012. "The treatment effect, the cross difference, and the interaction term in nonlinear “difference-in-differences” models," Economics Letters, Elsevier, vol. 115(1), pages 85-87.
  2. Sokbae Lee & Ralf A. Wilke, 2005. "Reform of unemployment compensation in Germany: a nonparametric bounds analysis using register data," CeMMAP working papers CWP02/05, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  3. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
  4. Winter-Ebmer, Rudolf, 2003. "Benefit duration and unemployment entry: A quasi-experiment in Austria," European Economic Review, Elsevier, vol. 47(2), pages 259-273, April.
  5. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, March.
  6. Tomi Kyyrä & Ralf A. Wilke, 2007. "Reduction in the Long-Term Unemployment of the Elderly: A Success Story from Finland," Journal of the European Economic Association, MIT Press, vol. 5(1), pages 154-182, 03.
  7. Knut Gerlach & David Levine & Gesine Stephan & Olaf Struck, 2008. "Fairness and the employment contract: North American regions versus Germany," Cambridge Journal of Economics, Oxford University Press, vol. 32(3), pages 421-439, May.
  8. 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.
  9. Arntz, Melanie & Wilke, Ralf A., 2006. "Unemployment duration in Germany: individual and regional determinants of local job finding, migration and subsidized employment," ZEW Discussion Papers 06-92, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Rafael Lalive & Jan C. van Ours & Josef Zweimüller, 2004. "How Changes in Financial Incentives Affect the Duration of Unemployment," CESifo Working Paper Series 1337, CESifo Group Munich.
  11. Heinemann Friedrich & Bischoff Ivo & Hennighausen Tanja, 2009. "Choosing from the Reform Menu Card – Individual Determinants of Labour Market Policy Preferences," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(2-3), pages 180-197, April.
  12. Rafael LALIVE, 2006. "How do Extended Benefits affect Unemployment Duration? A Regression Discontinuity Approach," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 06.06, Université de Lausanne, Faculté des HEC, DEEP.
  13. Elke J. Jahn, 2009. "Do firms obey the law when they fire workers? Social criteria and severance payments in Germany," International Journal of Manpower, Emerald Group Publishing, vol. 30(7), pages 672-691, November.
  14. Addison, John T. & Portugal, Pedro, 2007. "How Do Different Entitlements to Unemployment Benefits Affect the Transitions from Unemployment into Employment?," IZA Discussion Papers 3016, Institute for the Study of Labor (IZA).
  15. Arnds, Pascal & Bonin, Holger, 2002. "Frühverrentung in Deutschland: Ökonomische Anreize und institutionelle Strukturen," IZA Discussion Papers 666, Institute for the Study of Labor (IZA).
  16. Anders Karlstrom & Marten Palme & Ingemar Svensson, 2004. "A dynamic programming approach to model the retirement behaviour of blue-collar workers in Sweden," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 795-807.
  17. Fitzenberger, Bernd & Wilke, Ralf A., 2004. "Unemployment Durations in West-Germany Before and After the Reform of the Unemployment Compensation System During the 1980s," ZEW Discussion Papers 04-24, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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