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The Effects of Reducing the Entitlement Period to Unemployment Insurance Benefits

Author

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  • De Groot, Nynke

    () (Free University Amsterdam)

  • van der Klaauw, Bas

    () (Vrije Universiteit Amsterdam)

Abstract

This paper exploits a substantial reform of the Dutch UI law to study the effect of the entitlement period on job finding and subsequent labor market outcomes. Using detailed administrative data covering the full population we find that reducing the entitlement period increases the job finding rate, but decreases the job quality. Unemployed workers accept more often temporary jobs with lower wages and fewer working hours. Therefore, they also change jobs more frequently. The reform did not affect total post-unemployment earnings indicating that the positive effects on job finding and job turnover cancel out the negative effects on job quality. We also observe a spike in job finding around benefits exhaustion even, although more modest, for individuals who do not experience a drop in benefits level when moving to welfare.

Suggested Citation

  • De Groot, Nynke & van der Klaauw, Bas, 2014. "The Effects of Reducing the Entitlement Period to Unemployment Insurance Benefits," IZA Discussion Papers 8336, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp8336
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    References listed on IDEAS

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    Cited by:

    1. Wiljan van den Berge, 2016. "How do severance pay and job search assistance jointly affect unemployment duration and job quality?," CPB Discussion Paper 334, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Muller, Paul & van der Klaauw, Bas & Heyma, Arjan, 2017. "Comparing Econometric Methods to Empirically Evaluate Job-Search Assistance," Working Papers in Economics 691, University of Gothenburg, Department of Economics.
    3. Koning, Pierre & van Sonsbeek, Jan-Maarten, 2017. "Making disability work? The effects of financial incentives on partially disabled workers," Labour Economics, Elsevier, vol. 47(C), pages 202-215.
    4. Anja Deelen & Marloes de Graaf-Zijl & Wiljan van den Berge, 2018. "Labour market effects of job displacement for prime-age and older workers," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-30, December.

    More about this item

    Keywords

    unemployment benefits entitlement; job finding; job quality; difference-in-differences; duration model;

    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
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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