Do Benefit Hikes Damage Job Finding? Evidence from Swedish Unemployment Insurance Reforms

36 Pages Posted: 1 Mar 2007

See all articles by Helge Bennmarker

Helge Bennmarker

IFAU - Institute for Labour Market Policy Evaluation

Kenneth Carling

Uppsala University

Bertil Holmlund

Uppsala University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

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Abstract

In 2001 and 2002, Sweden introduced several unemployment insurance reforms. A major innovation in the first reform was the introduction of a two-tiered benefit structure for some unemployed individuals. This system involved supplementary compensation during the first 20 weeks of unemployment. The 2002 reform retained the two-tiered benefit structure but involved also substantial benefit hikes for spells exceeding 20 weeks. This paper examines how these reforms affected transitions from unemployment to employment. We take advantage of the fact that the reforms had quasi-experimental features where the 'treatments' differed considerably among unemployed individuals. We find that the reforms had strikingly different effects on job finding among men and women. The two reforms in conjunction are estimated to have increased the expected duration of unemployment among men but to have decreased the duration of unemployment among women. The overall effect on the duration of unemployment is not statistically different from zero. However, the reforms reduced job finding among men who remained unemployed for more than 20 weeks.

Suggested Citation

Bennmarker, Helge and Carling, Kenneth and Holmlund, Bertil, Do Benefit Hikes Damage Job Finding? Evidence from Swedish Unemployment Insurance Reforms. Labour, Vol. 21, No. 1, pp. 85-120, March 2007. Available at SSRN: https://ssrn.com/abstract=966518 or http://dx.doi.org/10.1111/j.1467-9914.2006.00363.x

Helge Bennmarker

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden

Kenneth Carling

Uppsala University ( email )

Office of Labour Market Policy Evaluation
SE-751 20 Uppsala
Sweden
+46-18-4717087 (Phone)

Bertil Holmlund (Contact Author)

Uppsala University - Department of Economics ( email )

SE-75120 Uppsala
Sweden
+46 18 471 1122 (Phone)
+46 18 471 1478 (Fax)

HOME PAGE: http://www.nek.uu.se/faculty/holmlund/index.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

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

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