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Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity

Authors
Publication Date
Keywords
  • J65
  • J64
  • C41
  • Ddc:330
  • Quasi-Experiments
  • Policy Endogeneity
  • Benefit Entitlement
  • Maximum Benefit Duration
  • Unemployment Duration
  • Unemployment Insurance
  • Arbeitslosigkeit
  • Dauer
  • Arbeitslosenversicherung
  • Österreich
Disciplines
  • Economics

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 program was an endogenous policy response to a crisis affecting individuals with severe labor 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.

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