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Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity

  • Lalive, Rafael

    ()

    (University of Lausanne)

  • Zweimüller, Josef

    ()

    (University of Zurich)

The potential duration of benefits is generally viewed as an important determinant of unemployment duration. This paper evaluates a unique policy change that prolonged entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions of Austria. In the evaluation, we explicitly account for the fact that the program was an endogenous policy response to a crisis affecting individuals with severe labor market problems. The main results are: (i) REBP reduced the transition rate to jobs by 17 %; (ii) accounting for endogenous policy adoption is important and quantitatively significant.

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File URL: http://ftp.iza.org/dp492.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 492.

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Length: 48 pages
Date of creation: May 2002
Date of revision:
Publication status: published in: Journal of Public Economics, 2004, 88 (12), 2587-2616
Handle: RePEc:iza:izadps:dp492
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