Discussion Paper Details

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Title: Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity

Author(s): Rafael Lalive and Josef Zweimüller

Publication Date: May 2002

Keyword(s): benefit entitlement, maximum benefit duration, policy endogeneity, quasi-experiments, unemployment duration and unemployment insurance

Programme Area(s): Labour Economics

Abstract: The potential duration of benefits is generally viewed as an important determinant of unemployment duration. This Paper evaluates a unique policy change that prolonged entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions of Austria. In the evaluation, we explicitly account for the fact that the programme was an endogenous policy response to a crisis affecting individuals with severe labour market problems. The main results are: (i) REBP reduced the transition rate to jobs by 17 %; (ii) accounting for endogenous policy adoption is important and quantitatively significant.

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Bibliographic Reference

Lalive, R and Zweimüller, J. 2002. 'Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity'. London, Centre for Economic Policy Research.