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Does Extending Unemployment Benefits Improve Job Quality?

Arash Nekoei and Andrea Weber ()

American Economic Review, 2017, vol. 107, issue 2, 527-61

Abstract: Contrary to standard search models predictions, past studies have not found a positive effect of unemployment insurance (UI) on reemployment wages. We estimate a positive UI wage effect exploiting an age-based regression discontinuity design in Austria. A search model incorporating duration dependence predicts two countervailing forces: UI induces workers to seek higher-wage jobs, but reduces wages by lengthening unemployment. Matching-function heterogeneity plausibly generates a negative relationship between the UI unemployment-duration and wage effects, which holds empirically in our sample and across studies, reconciling disparate wage-effect estimates. Empirically, UI raises wages by improving reemployment firm quality and attenuating wage drops.

JEL-codes: J31 J64 J65 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.20150528
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Related works:
Working Paper: Does Extending Unemployment Benefits Improve Job Quality? (2015) Downloads
Working Paper: Does Extending Unemployment Benefits Improve Job Quality? (2015) Downloads
Working Paper: Does Extending Unemployment Benefits Improve Job Quality? (2014) Downloads
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