Shortening the potential duration of unemployment benefits and labor market outcomes: Evidence from a natural experiment in Germany
Research output: Working paper › Working papers
Authors
This paper explores the effects of a major reform of unemployment benefits in Germany on the labor market outcomes of individuals with some health impairment. The reform induced a substantial reduction in the potential duration of regular unemployment benefits for older workers. This work analyzes the reform in a wider framework of institutional interactions, which allows us to distinguish between its intended and unintended effects. Our results provide causal evidence for a significant decrease in the number of days in unemployment benefits and increase in the number of days in employment. However, they also suggest a significant increase in the number of days in unemployment assistance, granted upon exhaustion of unemployment benefits. Transitions to unemployment assistance represent an unintended effect, limiting the success of a policy change that aims to increase labor supply via reductions in the generosity of the unemployment insurance system.
Original language | English |
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Place of Publication | Lüneburg |
Publisher | Institut für Volkswirtschaftslehre der Universität Lüneburg |
Number of pages | 48 |
Publication status | Published - 01.2018 |
- Economics