Discussion paper

DP3363 Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity

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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Citation

Zweimüller, J and R Lalive (2002), ‘DP3363 Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity‘, CEPR Discussion Paper No. 3363. CEPR Press, Paris & London. https://cepr.org/publications/dp3363