Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity

Lalive, Rafael; Zweimüller, Josef

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Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity

48 Pages Posted: 14 Jun 2002

See all articles by Rafael Lalive

Rafael Lalive

University of Lausanne - Department of Economics; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Josef Zweimüller

University of Zurich - Department of Economics; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

There are 2 versions of this paper

Date Written: May 2002

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.

Keywords: Quasi-experiments, policy endogeneity, benefit entitlement, maximum benefit duration, unemployment duration, unemployment insurance

JEL Classification: C41, J64, J65

Suggested Citation: Suggested Citation

Lalive, Rafael and Zweimueller, Josef, Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity (May 2002). Available at SSRN: https://ssrn.com/abstract=316162