The Effect of Receiving Supplementary UI Benefits on Unemployment Duration

Abstract

We consider the consequences of working part-time on supplementary unemployment insurance benefits in the Danish labour market. Following the timing-of-events approach we estimate causal effects of subsidized part-time work on the hazard rate out of unemployment insurance benefit receipt. We find evidence of a negative lock-in effect and a positive post-treatment effect, both of which vary across individuals. The resulting net effect on the expected unemployment duration is positive for some groups (e.g. married women) and negative for others (e.g. young workers).

Keywords: unemployment benefits, part-time work, lock-in effect, treatment effect, duration analysis

JEL Classification: C41, J65