The Effects of UI Benefits on Unemployment and Subsequent Outcomes: Evidence from a Kinked Benefit Rule

Tomi Kyyrä and Hanna Onerva Pesola ()
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Hanna Onerva Pesola: VATT Institute for Economic Reserach, Helsinki

No 10484, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes the effects of unemployment insurance (UI) benefits on unemployment exits and subsequent labor market outcomes. We exploit a piecewise linear relationship between the previous wage and UI benefits in Finland to identify the causal effects of the benefit level by using a regression kink design. According to our findings, higher benefits lengthen nonemployment spells and decrease time spent in part-time unemployment, and thus result in more full-time unemployment. Also the re-employment probability and post-unemployment wage are negatively affected. The results for the duration of the first post-unemployment job are not conclusive, but in total both employment and earnings in the two years following the beginning of the unemployment spell decrease with higher benefits.

Keywords: unemployment duration; job match quality; regression kink design; unemployment insurance (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2017-01
New Economics Papers: this item is included in nep-ias and nep-lab
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Citations: View citations in EconPapers (1)

Published - published in: Oxford Bulletin of Economics and Statistics, 2020, 82, 1135-1160

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Related works:
Journal Article: The Effects of UI Benefits on Unemployment and Subsequent Outcomes: Evidence from a Kinked Benefit Rule (2020)
Working Paper: The effects of UI benefits on unemployment and subsequent outcomes: Evidence from a kinked benefit rule (2016)
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