The effects of unemployment assistance on unemployment exits

Tomi Kyyrä

International Tax and Public Finance, 2023, vol. 30, issue 6, No 2, 1457-1480

Abstract: Abstract Many countries have a two-tiered unemployment compensation system that provides earnings-related unemployment insurance for a limited period of time and less generous unemployment assistance thereafter. This study evaluates the effects of a reform in Finland that increased the level of unemployment assistance by 22%. The reform led to a drop of 9% in the unemployment exit hazard, which can be attributed to fewer exits to both employment and inactivity. The implied elasticities suggest that a 10% increase in unemployment assistance reduces the unemployment exit hazard by 4% and the job-finding hazard by 6%. These effects are relatively small compared to the existing evidence on the effects of unemployment insurance benefits.

Keywords: Unemployment assistance; Labor market subsidy; Hazard rate; Unemployment duration (search for similar items in EconPapers)
JEL-codes: J64 J68 (search for similar items in EconPapers)
Date: 2023
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Working Paper: The Effects of Unemployment Assistance on Unemployment Exits (2021)
Working Paper: The Effects of Unemployment Assistance on Unemployment Exits (2021)
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DOI: 10.1007/s10797-022-09765-7

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