When Institutions Interact: How the Effects of Unemployment Insurance are Shaped by Retirement Policies

Matthew Gudgeon (), Pablo Guzman-Pinto (), Johannes Schmieder (), Simon Trenkle () and Han Ye ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We show that the non-employment effects of unemployment insurance (UI) for older workers depend critically on retirement policy. Using German data, we document large bunching in UI inflows at the age that allows workers to claim their pension following UI expiration. Inflows respond strongly to several UI and pension reforms. We probe the implications of these behavioral responses using a dynamic model and find that Germany’s UI and retirement policy changes had substantial effects on the unemployment rate of older workers. Furthermore, we calculate large fiscal externalities from extending UI for older workers, especially under generous retirement policies.

Keywords: Unemployment insurance; moral hazard; retirement; older workers; interactions (search for similar items in EconPapers)
JEL-codes: J26 J64 J65 (search for similar items in EconPapers)
Pages: 102
Date: 2023-12, Revised 2025-10
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2023_481v2

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