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Losing prospective entitlement to unemployment benefits. Impact on educational attainment

Author

Listed:
  • Bart Cockx

    (: Department of Economics)

  • Koen Declercq

    (CEREC, UCLouvain – SaintLouis Bruxelles)

  • Muriel Dejemeppe

    (IRES/LIDAM, UCLouvain)

Abstract

Providing income support to unemployed education-leavers reduces the returns to investments in education because it makes the consequences of unemployment less severe. We exploit in a difference-in-differences approach a two-part policy reform in Belgium to study whether conditioning the prospective entitlement to unemployment benefits for education-leavers on age, and schooling attainment can affect educational achievements. The first part of this reform disqualified labor market entrants over the age of 25 from benefits for which they were otherwise eligible if unemployed with little or no employment experience one year after leaving education. The second part conditioned the eligibility for this unemployment benefit for youth below the age of 21 on the attainment of a high school degree. While we find evidence that the prospect of financial loss in case of unemployment can significantly raise degree completion and reduce dropout in higher education, we find no evidence of an increase in the graduation rate in high school.

Suggested Citation

  • Bart Cockx & Koen Declercq & Muriel Dejemeppe, 2022. "Losing prospective entitlement to unemployment benefits. Impact on educational attainment," Working Paper Research 410, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:202205-410
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    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • 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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