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Effects of a higher replacement rate on unemployment durations, employment, and earnings

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  • Eugster, Beatrix

Abstract

This paper discusses the effects of a higher unemployment benefit replacement rate on unemployment durations, employment, and earnings. A reform of unemployment insurance in Switzerland in July 2003 increased the replacement rate by up to 5.88 p.p. for individuals who earned between 3,536 and 4,340 CHF and have no children, while it did not change the replacement rate for all other unemployed persons. This allows to study the effects of a higher replacement rate adopting a difference-in-differences (DiD) approach. I find no statistically significant effect of an increase in the replacement rate on unemployment durations, employment, and earnings for Swiss men and migrants, but a statistically significant positive effect on unemployment durations for Swiss women.

Suggested Citation

  • Eugster, Beatrix, 2013. "Effects of a higher replacement rate on unemployment durations, employment, and earnings," Economics Working Paper Series 1320, University of St. Gallen, School of Economics and Political Science.
    • Handle: RePEc:usg:econwp:2013:20
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    References listed on IDEAS

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    Cited by:

    1. Beatrix Eugster & Rafael Lalive & Andreas Steinhauer & Josef Zweimüller, 2017. "Culture, Work Attitudes, and Job Search: Evidence from the Swiss Language Border," Journal of the European Economic Association, European Economic Association, vol. 15(5), pages 1056-1100.
    2. Cottier, Lionel & Flückiger, Yves & Kempeneers, Pierre & Lalive, Rafael, 2018. "Does Job Search Assistance Really Raise Employment?," IZA Discussion Papers 11766, Institute of Labor Economics (IZA).
    3. Kakoulidou, Theoni & Doolan, Michael & Roantree, Barra, 2022. "Earnings-related benefits in Ireland: Rationale, costs and work incentives," Papers BP2023/2, Economic and Social Research Institute (ESRI).
    4. Lionel Cottier & Yves Flückiger & Pierre Kempeneers & Rafael Lalive, 2024. "Employment Effects of Job Search Assistance for the Long-Term Unemployed," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 577-581, May.

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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