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Long-Term Effects of Extended Unemployment Benefits for Older Workers

Listed author(s):
  • Kyyrä, Tomi

    ()

    (VATT, Helsinki)

  • Pesola, Hanna

    ()

    (VATT, Helsinki)

Registered author(s):

    This paper examines the long-term effects of extended unemployment benefits that older unemployed can collect until retirement in Finland. We consider a reform that increased the age threshold of this scheme from 55 to 57 for people born in 1950 or later. Our regression discontinuity estimates show that postponing eligibility by two years increased employment over the remaining working career by seven months. Despite the corresponding reduction in unemployment, we find no evidence of significant effects on mortality or receipt of disability and sickness benefits, nor on the spouse's labor supply. We also compute the fiscal impact of the reform taking into account income taxes and social security contributions paid and benefits received. The reform increased net income transfers by 15,000 Euros over the 10-year period for an average individual.

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    File URL: http://ftp.iza.org/dp10839.pdf
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    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10839.

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    Length: 31 pages
    Date of creation: Jun 2017
    Handle: RePEc:iza:izadps:dp10839
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    1. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 595-629, July.
    2. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    3. Lammers, Marloes & Bloemen, Hans & Hochguertel, Stefan, 2013. "Job search requirements for older unemployed: Transitions to employment, early retirement and disability benefits," European Economic Review, Elsevier, vol. 58(C), pages 31-57.
    4. 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.
    5. Tatsiramos, Konstantinos, 2010. "Job displacement and the transitions to re-employment and early retirement for non-employed older workers," European Economic Review, Elsevier, vol. 54(4), pages 517-535, May.
    6. Tomi Kyyrä, 2015. "Early Retirement Policy in the Presence of Competing Exit Pathways: Evidence from Pension Reforms in Finland," Economica, London School of Economics and Political Science, vol. 82(325), pages 46-78, 01.
    7. Zweimuller, Josef & Winter-Ebmer, Rudolf & Falkinger, Josef, 1996. "Retirement of spouses and social security reform," European Economic Review, Elsevier, vol. 40(2), pages 449-472, February.
    8. Marcus Eliason & Donald Storrie, 2009. "Does Job Loss Shorten Life?," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
    9. Daniel Sullivan & Till von Wachter, 2009. "Job Displacement and Mortality: An Analysis Using Administrative Data," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 1265-1306.
    10. 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.
    11. Baguelin, Olivier & Remillon, Delphine, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Labour Economics, Elsevier, vol. 30(C), pages 245-264.
    12. Plug, Erik J. S., 2001. "Season of birth, schooling and earnings," Journal of Economic Psychology, Elsevier, vol. 22(5), pages 641-660, October.
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