TY - UNPB

T1 - Shortening the potential duration of unemployment benefits and labor market outcomes

T2 - Evidence from a natural experiment in Germany

AU - Petrunyk, Inna

AU - Pfeifer, Christian

PY - 2018/1

Y1 - 2018/1

N2 - 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.

AB - 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.

KW - Economics

UR - https://www.leuphana.de/en/institutes/ivwl/publications/working-papers/2018.html

M3 - Working papers

T3 - University of Lüneburg Working Paper Series in Economics

BT - Shortening the potential duration of unemployment benefits and labor market outcomes

PB - Institut für Volkswirtschaftslehre der Universität Lüneburg

CY - Lüneburg

ER -