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Working to get fired? Regression discontinuity effects of unemployment benefit eligibility on prior employment duration

Pedro Martins

No 61, Working Papers from Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research

Abstract: In most countries, the unemployed are entitled to unemployment benefits only if they have previously worked a minimum period of time. This institutional feature creates a sharp change at eligibility in the disutility from unemployment and may distort the duration of jobs. In this paper, we show that this effect can be evaluated using a regression discontinuity approach. Our evidence is based on longitudinal social security data from Portugal, where the unemployed are required to work a relatively long period to collect benefits. We find that monthly transitions from employment to unemployment increase by 10% as soon as the eligibility condition is met. This result is driven entirely by transitions to subsidised unemployment, which increase by 20%, as non-subsidised unemployment is not affected. The effects are even larger for the unemployed with high replacement ratios or those who meet the eligibility condition from multiple employment spells.

Keywords: Unemployment insurance; Moral hazard; Employment duration; Big data (search for similar items in EconPapers)
JEL-codes: C55 J63 J65 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://cgr.sbm.qmul.ac.uk/CGRWP61.pdf

Related works:
Working Paper: Working to Get Fired? Regression Discontinuity Effects of Unemployment Benefit Eligibility on Prior Employment Duration (2016) Downloads
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