Working Paper: CEPR ID: DP3363
Authors: Rafael Lalive; Josef Zweimüller
Abstract: The potential duration of benefits is generally viewed as an important determinant of unemployment duration. This Paper evaluates a unique policy change that prolonged entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions of Austria. In the evaluation, we explicitly account for the fact that the programme was an endogenous policy response to a crisis affecting individuals with severe labour market problems. The main results are: (i) REBP reduced the transition rate to jobs by 17 %; (ii) accounting for endogenous policy adoption is important and quantitatively significant.
Keywords: benefit entitlement; maximum benefit duration; policy endogeneity; quasiexperiments; unemployment duration; unemployment insurance
JEL Codes: C41; J64; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| extended benefit entitlement (rebp) (H55) | reduced transition rate to jobs (J63) |
| endogenous policy adoption (F68) | biased estimates of the effect of benefit entitlement on unemployment duration (C41) |