Working to Get Fired? Regression Discontinuity Effects of Unemployment Benefit Eligibility on Prior Employment Duration

Pedro Martins

No 10262, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In most countries, the unemployed are entitled to unemployment benefits only if they have previously worked a minimum period of time. This institutional feature creates a sharp change at eligibility in the disutility from unemployment and may distort the duration of jobs. In this paper, we evaluate this eligibility effect using a regression discontinuity approach. Our evidence is based on longitudinal social security data from Portugal, where the unemployed are required to work a relatively long period to collect benefits. We find that monthly transitions from employment to unemployment increase by 10% as soon as the eligibility condition is met. This result is driven entirely by transitions to subsidised unemployment, which increase by 20%, as non-subsidised unemployment is not affected. The effects are even larger for the unemployed with high replacement ratios or those who meet the eligibility condition from multiple short employment spells.

Keywords: employment duration; moral hazard; unemployment insurance; big data (search for similar items in EconPapers)
JEL-codes: C55 J63 J65 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2016-10
New Economics Papers: this item is included in nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: Journal of Policy Modelling, 2021, 43 (5), 1016-1030

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Related works:
Working Paper: Working to get fired? Regression discontinuity effects of unemployment benefit eligibility on prior employment duration (2015)
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