Working Paper: CEPR ID: DP9673
Authors: Rafael Lalive; Camille Landais; Josef Zweimuller
Abstract: This paper offers quasi experimental evidence of the existence of spillover effects of UI extensions using a unique program that extended unemployment benefits drastically for a subset of workers in selected regions of Austria. We use non-eligible unemployed in treated regions, and a difference-in-difference identification strategy to control for preexisting differences across treated and untreated regions. We uncover the presence of important spillover effects: in treated regions, as the search effort of treated workers plummets, the job finding probability of untreated workers increases, and their average unemployment duration and probability of long term unemployment decrease. These effects are the largest when the program intensity reaches its highest level, then decrease and disappear as the program is scaled down and finally interrupted. We use this evidence to assess the relevance of different assumptions on technology and the wage setting process in equilibrium search and matching models and discuss the policy implications of our results for the EUC extensions in the US.
Keywords: benefit extension; macro effects; market externality; unemployment insurance
JEL Codes: J21; J22; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| REBP program (M53) | search effort of treated workers (J68) |
| search effort of treated workers (J68) | job finding probability of untreated workers (J68) |
| job finding probability of untreated workers (J68) | average unemployment duration of non-eligible workers (J64) |
| REBP program (M53) | average unemployment duration of non-eligible workers (J64) |
| REBP program (M53) | probability of long-term unemployment for non-eligible workers (J64) |
| geographical integration with REBP regions (R32) | job finding probability of non-eligible workers (J68) |