Benefit Duration, Job Search Behavior and Re-Employment

Andreas Lichter and Amelie Schiprowski

No 8194, CESifo Working Paper Series from CESifo

Abstract: This paper studies how the potential duration of unemployment benefits affects individuals’ job search behavior and re-employment outcomes. We exploit an unexpected reform of the German unemployment insurance scheme in 2008, which increased the potential benefit duration from 12 to 15 months for recipients of age 50 to 54. Based on detailed survey data and difference-in-differences techniques, we estimate that one additional month of benefits reduces the number of filed applications by around 10% on average over the first two months of unemployment. Treatment effects on the reservation wage are positive but statistically insignificant. In a complementary analysis, we use social security data to investigate how the reform affected re-employment outcomes. The difference-in-differences estimates yield an elasticity of 0.24 (0.1) additional months in unemployment (nonemployment) per additional month of potential benefits. A cautious back-of-the-envelope calculation reveals substantial returns to early search effort.

Keywords: unemployment insurance; job search; re-employment outcomes; natural experiment (search for similar items in EconPapers)
JEL-codes: D83 I38 J64 J68 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-eur, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Benefit duration, job search behavior and re-employment (2021)
Working Paper: Benefit Duration, Job Search Behavior and Re-Employment (2020)
Working Paper: Benefit Duration, Job Search Behavior and Re-Employment (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8194

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