How Changes in Benefits Entitlement Affect Job-Finding: Lessons from the Slovenian Experiment

48 Pages Posted: 7 Jul 2004

See all articles by Jan C. van Ours

Jan C. van Ours

Tilburg University - Department of Economics; University of Melbourne - Department of Economics

Milan Vodopivec

World Bank - Human Development Network; IZA Institute of Labor Economics

Date Written: June 2004

Abstract

In 1998 the Slovenian UI system was drastically reformed. The reform reduced the potential duration of unemployment benefits substantially and simultaneously improved employment services offered to, and monitoring of, the recipients. We find that the reduction in potential benefit duration had a positive effect on the exit rate out of unemployment - both to employment and to other destinations - at various durations of unemployment spells and for many categories of unemployed workers. We also identify a clear spike in the exit rate out of unemployment in the month unemployment benefits expire (and a smaller spike in the month thereafter), and for males an increase of job-finding rate in the third month of unemployment, a likely consequence of a reduction of the level of benefit that occurs at that point. Interestingly, post-unemployment wages of recipients were not affected after the change of the law, suggesting that higher job-finding rates following the reduction of benefits were not produced by reduced reservation wages (higher acceptance probability) but rather more effective job-search activity.

Keywords: unemployment insurance, potential benefit duration, job finding rates, postunemployment wages

JEL Classification: C41, H55, J64, J65

Suggested Citation

van Ours, Jan C. and Vodopivec, Milan, How Changes in Benefits Entitlement Affect Job-Finding: Lessons from the Slovenian Experiment (June 2004). IZA Discussion Paper No. 1181. Available at SSRN: https://ssrn.com/abstract=562447

Jan C. Van Ours (Contact Author)

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2880 (Phone)
+31 13 466 3042 (Fax)

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

Milan Vodopivec

World Bank - Human Development Network ( email )

1818 H Street, NW
Washington, DC 20433
United States

IZA Institute of Labor Economics

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

Register to save articles to
your library

Register

Paper statistics

Downloads
93
Abstract Views
994
rank
274,679
PlumX Metrics