Estimating the Effects of Potential Benefit Duration without Variation in the Maximum Duration of Unemployment Benefits

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

No 10799, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the effects of unemployment benefit duration in Finland. To overcome the problem that the maximum duration of benefits is the same for all unemployed we exploit two observations. First, despite the uniform maximum benefit period, potential benefit duration at the beginning of unemployment spells varies across individuals because only those with sufficient work history in the past two years qualify for a new period of benefits whereas others may be entitled to unused benefit days from a previous spell. Second, part of this variation is exogenous due to a reform that reduced the minimum number of employment weeks required for the new benefit period. Using the exogenous part of the variation for identification we estimate that one extra week of benefits increases expected unemployment duration by 0.15 weeks, which corresponds to an elasticity of 0.5. We also find positive effects on the quality of the next job, especially when measured by job stability.

Keywords: eligibility conditions; unemployment duration; unemployment insurance (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2017-05
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:

Published - published as 'The effects of unemployment benefit duration: Evidence from residual benefit duration' in: Labour Economics, 2020, 65, 101859

Downloads: (external link)
https://docs.iza.org/dp10799.pdf (application/pdf)

Related works:
Working Paper: Estimating the effects of potential benefit duration without variation in the maximum duration of unemployment benefits (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp10799

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().