Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution

Zweimüller, Josef, Stefan Staubli and Lukas Inderbitzin
Authors registered in the RePEc Author Service: Josef Zweimüller ()

No 10646, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore how extended unemployment insurance (UI) benefits for older workers affect early retirement and welfare. We argue that extending UI benefits generates program complementarity (more labor market exits and disability benefit take-up in the future) and program substitution (less disability benefit take-up in the present). Exploiting a policy change in Austria, which extended UI benefits to 4 years, we find program complementarity effects for workers aged 50+ and program substitution effects for workers aged 55+. We apply the Baily-Chetty formula for optimal UI to account for complementarity and substitution, showing that UI benefits for older workers were too generous.

Keywords: Disability; Early retirement; Optimal benefits; Policy reform; Unemployment (search for similar items in EconPapers)
JEL-codes: J14 J26 J65 (search for similar items in EconPapers)
Date: 2015-06
New Economics Papers: this item is included in nep-age and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution (2016)
Working Paper: Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution (2013)
Working Paper: Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution (2013)
Working Paper: Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution (2013)
Working Paper: Extended Unemployment Benefits and Early Retirement: Program Complementarity and Program Substitution (2013)
Working Paper: Extended unemployment benefits and early retirement: program complementarity and program substitution (2013)
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