Working Paper: CEPR ID: DP4962
Authors: Jan C. van Ours; Milan Vodopivec
Abstract: This paper investigates the disincentive effects of the potential duration of unemployment insurance (UI) benefits. The disincentive effects are identified by exploiting changes in the UI system in Slovenia, which involved substantial reductions in the potential benefit duration and had characteristics of a ?natural experiment?. We find that the change 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.
Keywords: job finding rates; potential benefit duration; unemployment insurance
JEL Codes: C41; H55; J64; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduction in potential benefit duration (PBD) due to the 1998 reform in Slovenia (H55) | Increase in exit rates from unemployment (J65) |
| Reduction in potential benefit duration (PBD) due to the 1998 reform in Slovenia (H55) | Increase in exit rates to employment (J68) |
| Reduction in potential benefit duration (PBD) due to the 1998 reform in Slovenia (H55) | Increase in exit rates to other destinations (J69) |
| Expiration of unemployment benefits (J65) | Increased job finding rates (J68) |
| Reduction in potential benefit duration (PBD) (H43) | Increased job search efforts among recipients (J68) |