The Lock-In Effects of Part-Time Unemployment Benefits

79 Pages Posted: 15 Mar 2021 Last revised: 31 Mar 2021

See all articles by Helène Benghalem

Helène Benghalem

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Pierre Cahuc

Ecole Polytechnique, Paris

Pierre Villedieu

Sciences Po; SciencesPo - LIEPP - Laboratory for Interdisciplinary Evaluation of Public Policies; French Ministry of Social Affairs, Labour and Solidarity - Direction de l'Animation de la Recherche, des Etudes et des Statistiques (DARES)

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Date Written: March 2021

Abstract

We ran a large randomized controlled experiment among about 150,000 recipients of unemployment benefits insurance in France in order to evaluate the impact of part-time unemployment benefits. We took advantage of the lack of knowledge of job seekers regarding this program and sent emails presenting the program. The information provision had a significant positive impact on the propensity to work while on claim, but reduced the unemployment exit rate, showing important lock-in effects into unemployment associated with part-time unemployment benefits. The importance of these lock-in effects implies that decreasing the marginal tax rate on earnings from work while on claim in the neighborhood of its current level does not increase labor supply and increases the expenditure net of taxes of the unemployment insurance agency.

JEL Classification: H5, J64, J65

Suggested Citation

Benghalem, Helène and Cahuc, Pierre and Villedieu, Pierre, The Lock-In Effects of Part-Time Unemployment Benefits (March 2021). CEPR Discussion Paper No. DP15921, Available at SSRN: https://ssrn.com/abstract=3805344

Helène Benghalem (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Pierre Cahuc

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

Pierre Villedieu

Sciences Po ( email )

28 Rue des Saint-Peres
Paris, Paris 75006
France

SciencesPo - LIEPP - Laboratory for Interdisciplinary Evaluation of Public Policies ( email )

27, rue Saint-Guillaume
Paris
France

French Ministry of Social Affairs, Labour and Solidarity - Direction de l'Animation de la Recherche, des Etudes et des Statistiques (DARES) ( email )

7, Square Max Hymans
F-75741 Paris Cedex 15
France

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