The Effects of Reducing the Entitlement Period to Unemployment Insurance Benefits

46 Pages Posted: 2 Aug 2014

See all articles by Nynke De Groot

Nynke De Groot

VU University Amsterdam

Bas van der Klaauw

VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Tinbergen Institute

Abstract

This paper exploits a substantial reform of the Dutch UI law to study the effect of the entitlement period on job finding and subsequent labor market outcomes. Using detailed administrative data covering the full population we find that reducing the entitlement period increases the job finding rate, but decreases the job quality. Unemployed workers accept more often temporary jobs with lower wages and fewer working hours. Therefore, they also change jobs more frequently. The reform did not affect total post-unemployment earnings indicating that the positive effects on job finding and job turnover cancel out the negative effects on job quality. We also observe a spike in job finding around benefits exhaustion even, although more modest, for individuals who do not experience a drop in benefits level when moving to welfare.

Keywords: unemployment benefits entitlement, job finding, job quality, difference-in-differences, duration model

JEL Classification: J64, J65, C21, C41

Suggested Citation

De Groot, Nynke and van der Klaauw, Bas, The Effects of Reducing the Entitlement Period to Unemployment Insurance Benefits. IZA Discussion Paper No. 8336. Available at SSRN: https://ssrn.com/abstract=2475304

Nynke De Groot (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Bas Van der Klaauw

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6120 (Phone)
+31 20 444 6005 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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