Does Extending Unemployment Benefits Improve Job Quality?

Arash Nekoei and Andrea Weber

No 9034, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Contrary to standard search model predictions, prior studies failed to estimate a positive effect of unemployment insurance (UI) on reemployment wages. This paper estimates a positive UI wage effect exploiting an age-based regression discontinuity in Austrian administrative data. A search model incorporating duration dependence determines the UI wage effect as the balance between two offsetting forces: UI causes agents to seek higher-wage jobs, but also reduces wages by lengthening unemployment. This implies a negative relationship between the UI unemployment duration and wage effects, which holds empirically both in our sample and across studies, reconciling disparate wage-effect estimates. Empirically, UI raises wages by improving reemployment firms' quality and attenuating wage drops.

Keywords: unemployment insurance; job-search; wages (search for similar items in EconPapers)
JEL-codes: H5 J3 J6 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2015-04
New Economics Papers: this item is included in nep-dge, nep-eur, nep-ias, nep-lab and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

Published - published in: American Economic Review, 2017, 107(2), 527-561.

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Related works:
Journal Article: Does Extending Unemployment Benefits Improve Job Quality? (2017)
Working Paper: Does Extending Unemployment Benefits Improve Job Quality? (2015)
Working Paper: Does Extending Unemployment Benefits Improve Job Quality? (2014)
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