The Effects of Unemployment Assistance on Unemployment Exits

Tomi Kyyrä

No 143, Working Papers from VATT Institute for Economic Research

Abstract: Many countries have a two-tiered unemployment compensation system which 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; Social security; taxation and inequality; Labour markets and education; J64; J68; Sosiaaliturva; Työmarkkinat (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ias and nep-lab
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https://www.doria.fi/handle/10024/180650

Related works:
Journal Article: The effects of unemployment assistance on unemployment exits (2023)
Working Paper: The Effects of Unemployment Assistance on Unemployment Exits (2021)
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