Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity
47 Pages Posted: 9 Jun 2002
Date Written: May 2002
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 program was an endogenous policy response to a crisis affecting individuals with severe labor 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