Working Paper: CEPR ID: DP15921
Authors: Hlne Benghalem; Pierre Cahuc; Pierre Villedieu
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.
Keywords: unemployment insurance; part-time unemployment benefits; lock-in effects; unemployment duration
JEL Codes: H5; J64; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Anticipation of benefits from working while on claim (J65) | Reservation wages (J31) |
| Anticipation of benefits from working while on claim (J65) | Job search efforts (J68) |
| Provision of information about part-time unemployment benefits (J68) | Propensity to work while on claim (J68) |
| Provision of information about part-time unemployment benefits (J68) | Unemployment exit rate (J63) |
| Provision of information about part-time unemployment benefits (J68) | Probability of remaining unemployed until exhaustion of benefits (J64) |
| Provision of information about part-time unemployment benefits (J68) | Unemployment insurance expenditures net of taxes (J65) |