Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes

Gerard Domènech-Arumí (gerard.domenech.arumi@vanderbilt.edu) and Silvia Vannutelli

No 2023-08, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: We exploit an unanticipated labor market reform to estimate the effects of procyclical changes in long-term unemployment assistance (UA). In July 2012, Spain raised the minimum age to receive unlimited-duration UA from 52 to 55. Using a difference-in-differences design, we document that shorter benefits caused (i) shorter non-employment duration, especially among younger workers; (ii) higher labor force exit and other programs' take-up, especially among older workers; (iii) lower wages upon re-employment. The reform induced moderate government savings. Our resultshighlight the importance of considering the interplay with labor market conditions when designing long-term beneffit schedules that affect workers close to retirement.

Pages: 44 p.
Date: 2023-04
New Economics Papers: this item is included in nep-age, nep-eec and nep-lma
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Related works:
Journal Article: Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-Cyclical Unemployment Assistance Changes (2025)
Working Paper: Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes (2022)
Working Paper: Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes (2022)
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