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Unemployment and Subsequent Employment Stability: Does Labour Market Policy Matter?

Author

Listed:
  • Wulfgramm, Melike

    (University of Southern Denmark)

  • Fervers, Lukas

    (University of Bremen)

Abstract

This paper analyses the effect of unemployment insurance generosity and active labour market policy on reemployment stability in Europe. Using EU-SILC and OECD data, we conduct discrete time survival analyses with shared frailty specification to identify policy effects at the micro and macro level. Empirical evidence suggests that unemployment benefit receipt is associated with longer reemployment duration at the individual level. Furthermore, countries with more generous unemployment insurance and higher ALMP spending show a more sustainable reintegration record of previously unemployed workers. These results point to a policy trade-off between the well-confirmed disincentive and locking-in effect of unemployment benefits and ALMP programmes on the one hand, and their positive effect on reemployment stability on the other hand.

Suggested Citation

  • Wulfgramm, Melike & Fervers, Lukas, 2013. "Unemployment and Subsequent Employment Stability: Does Labour Market Policy Matter?," IZA Discussion Papers 7193, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp7193
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    References listed on IDEAS

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    Cited by:

    1. Tingyun Chen & Jean-Jacques Hallaert & Alexander Pitt & Haonan Qu & Maximilien Queyranne & Alaina Rhee & Anna Shabunina & Jérôme Vandenbussche & Irene Yackovlev, 2018. "Inequality and Poverty across Generations in the European Union," IMF Staff Discussion Notes 18/01, International Monetary Fund.
    2. Martin Guzi, 2014. "An Empirical Analysis of Welfare Dependence in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(5), pages 407-431, November.
    3. Paula Nagler, 2013. "How unemployment insurance savings accounts affect employment duration: evidence from Chile," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-25, December.
    4. Nagler, Paula, 2015. "The impact of unemployment insurance savings accounts on subsequent employment quality," MERIT Working Papers 2015-026, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    Keywords

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    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
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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