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The effects of reducing the entitlement period to unemployment insurance benefits

Nynke de Groot and Bas van der Klaauw

Labour Economics, 2019, vol. 57, issue C, 195-208

Abstract: This paper uses a difference-in-differences approach exploiting a substantial reform of the Dutch unemployment insurance law and a regression discontinuity design based on policy discontinuities prior to the reform to study the effects of the benefits entitlement period on job finding and subsequent labor market outcomes. Using detailed administrative data covering the full population, both identification strategies show that reducing the entitlement period increases the job finding rate. We find mixed results for the quality of the job-worker match, which we attribute to differences in the time period and the group of affected unemployed workers. However, all our estimation results show that a shorter benefits entitlement period substantially increases cumulative earnings. These increases in earnings are larger than the cumulative reduction in benefits payments.

Keywords: Unemployment benefits entitlement; Job finding; Job quality; Difference-in-differences; Regression discontinuity (search for similar items in EconPapers)
JEL-codes: J64 J65 C21 C41 (search for similar items in EconPapers)
Date: 2019
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