Unemployment Insurance Eligibility and Employment Duration

Clément Brébion (), Simon Briole () and Laura Khoury ()
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Clément Brébion: Copenhagen Business School
Simon Briole: Paris School of Economics
Laura Khoury: PSL Université Paris Dauphine

No 18014, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: While extensive research on unemployment insurance (UI) has examined how benefits affect workers’ job search, little is known about how eligibility conditions shape firms’ hiring decisions. These conditions, often requiring a minimum work history, affect the value workers place on contracts meeting the eligibility threshold. Exploiting a French reform that modified these requirements after 2009, we show that firms internalize workers’ preferences and adjust contract durations to align with the new threshold. This reveals an overlooked ex-ante mechanism, where firms respond to UI incentives when posting vacancies—before meeting workers—rather than only through ex post adjustments. This response shifts contract duration distributions, also affecting workers already eligible for UI. Our findings have two implications: first, UI shapes firms’ behavior at the vacancy stage, influencing job creation decisions ex ante, not just separation decisions ex post; second, UI eligibility conditions generate significant spillover effects.

Keywords: firm behavior; employment duration; unemployment insurance; temporary employment (search for similar items in EconPapers)
JEL-codes: H32 J08 J64 J65 (search for similar items in EconPapers)
Date: 2025-07
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