How Changes in Benefits Entitlement Affect Job-Finding: Lessons from the Slovenian "Experiment"

Jan van Ours and Milan Vodopivec

No 1181, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In 1998 the Slovenian UI system was drastically reformed. The reform reduced the potential duration of unemployment benefits substantially and simultaneously improved employment services offered to, and monitoring of, the recipients. We find that the reduction in potential benefit duration had a positive effect on the exit rate out of unemployment – both to employment and to other destinations – at various durations of unemployment spells and for many categories of unemployed workers. We also identify a clear spike in the exit rate out of unemployment in the month unemployment benefits expire (and a smaller spike in the month thereafter), and for males an increase of job-finding rate in the third month of unemployment, a likely consequence of a reduction of the level of benefit that occurs at that point. Interestingly, post-unemployment wages of recipients were not affected after the change of the law, suggesting that higher job-finding rates following the reduction of benefits were not produced by reduced reservation wages (higher acceptance probability) but rather more effective job-search activity.

Keywords: post-unemployment wages; unemployment insurance; potential benefit duration; job finding rates (search for similar items in EconPapers)
JEL-codes: C41 H55 J64 J65 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2004-06
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published - published in: Journal of Labor Economics, 2006, 24 (2), 351-378

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Working Paper: How changes in benefits entitlement affect job-finding: lessons from the slovenian experiment (2005)
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