Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change

Rafael Lalive and Josef Zweimüller ()

No 444, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes the impact of the Austrian Regional Extended Benefit Program (REBP) on the labor market outcomes for elderly workers in Austria. The REBP extended entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for elderly individuals in certain regions. This policy change created a large-scale quasi-experimental situation from which a lot can be learned about the impact of unemployment insurance rules on the dynamics of employment, unemployment, and wages. We find that the REBP led to a tremendous increase in unemployment, which was due to both an increase in the inflow to and the outflow from unemployment. The REBP also induced a strong increase in early retirement and in many cases, in particular for steel workers, entering unemployment meant withdrawal from the labor force. Finally, we show that there were also non-negligible effects of extended benefits on the level and the distribution of wages.

Keywords: inequality; early retirement; earnings; duration of unemployment; unemployment inflow; maximum benefit duration; Quasi-experiments (search for similar items in EconPapers)
JEL-codes: C41 J64 J65 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2002-02
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 (11)

Published - published in: Jonas Agell, Michael Keen and Alfons Weichenrieder (eds.), Labor Market Institutions and Public Regulation, 2004, 63-100

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Related works:
Working Paper: Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change (2002)
Working Paper: Benefit Entitlement and the Labor Market: Evidence from a Large-Scale Policy Change
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