Switching from an Inclining to a Zero-Level Unemployment Benefit Profile: Good for Work Incentives?

23 Pages Posted: 2 Mar 2020

See all articles by Bart Cockx

Bart Cockx

Ghent University - Sherppa - Faculty of Economics and Business Administration; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute); IRES, Université Catholique de Louvain

Koen Declercq

KU Leuven - Faculty of Business and Economics (FEB)

Muriel Dejemeppe

Catholic University of Louvain - School of Economic and Social Research

Bruno Van der Linden

Université Catholique de Louvain - Institut de Recherches Economiques et Sociales; IZA Institute of Labor Economics

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Abstract

This paper evaluates the impact on the transition to work of a policy reform in Belgium that restricted the access to a specific unemployment insurance scheme for young labor market entrants. This scheme entitles youths with no or little labor market experience to unemployment benefits after a waiting period of one year. As of 2015, the Belgian government unexpectedly scrapped benefit eligibility for youths who start the waiting period at the age of 24 or older. The reform implied a change from an inclining to a flat rate (zero-level) benefit profile. We use a difference-in-differences approach to identify the causal impact of this reform on fresh university graduates. Our main finding is that this reform only increases the transition to very short-lived jobs.

Keywords: youth unemployment, unemployment insurance, policy evaluation, difference-in-differences

JEL Classification: J64, J65, J68

Suggested Citation

Cockx, Bart L. W. and Declercq, Koen and Dejemeppe, Muriel and Van der Linden, Bruno, Switching from an Inclining to a Zero-Level Unemployment Benefit Profile: Good for Work Incentives?. IZA Discussion Paper No. 13002, Available at SSRN: https://ssrn.com/abstract=3546399 or http://dx.doi.org/10.2139/ssrn.3546399

Bart L. W. Cockx (Contact Author)

Ghent University - Sherppa - Faculty of Economics and Business Administration ( email )

Ghent, B-9000
Belgium

Institute for the Study of Labor (IZA)

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

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IRES, Université Catholique de Louvain

Place Montesquieu, 3
Louvain-la-Neuve
Belgium

Koen Declercq

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Muriel Dejemeppe

Catholic University of Louvain - School of Economic and Social Research ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium
+32 10 47 41 00 (Phone)
+32 10 47 39 45 (Fax)

Bruno Van der Linden

Université Catholique de Louvain - Institut de Recherches Economiques et Sociales ( email )

3, Place Montesquieu
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://perso.uclouvain.be/bruno.vanderlinden/

IZA Institute of Labor Economics

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

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