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Unemployment Benefits In A Period Of Crisis: The Effect On Unemployment Duration

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  • Anne Lauringson

Abstract

The current study shows that the disincentive effects of unemployment benefits exist even during a period of deep recession. The study uses recent data for unemployment benefit recipients in Estonia – a country where the rise in unemployment during the global financial crisis was the highest in the entire European Union. Both a higher benefit level and a longer maximum duration of benefits decrease exits from unemployment to employment. Yet, compared to the pre-crisis period, the effects of unemployment benefits are slightly milder and more homogenous. In addition, unemployed people directed to active measures tend to exhibit a lower hazard of leaving unemployment just before the period of an active measure and during the period of receiving an active measure.

Suggested Citation

  • Anne Lauringson, 2011. "Unemployment Benefits In A Period Of Crisis: The Effect On Unemployment Duration," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 82, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  • Handle: RePEc:mtk:febawb:82
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    References listed on IDEAS

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    Cited by:

    1. Lilas Demmou, 2012. "Matching Skills and Jobs in Estonia," OECD Economics Department Working Papers 1007, OECD Publishing.

    More about this item

    Keywords

    unemployment benefits; disincentive effects; economic crisis; Estonia;

    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
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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