Does Extending Unemployment Benefits Improve Job Quality?
Arash Nekoei and
Andrea Weber ()
No 9034, IZA Discussion Papers from Institute of Labor Economics (IZA)
Contrary to standard search model predictions, prior studies failed to estimate a positive effect of unemployment insurance (UI) on reemployment wages. This paper estimates a positive UI wage effect exploiting an age-based regression discontinuity in Austrian administrative data. A search model incorporating duration dependence determines the UI wage effect as the balance between two offsetting forces: UI causes agents to seek higher-wage jobs, but also reduces wages by lengthening unemployment. This implies a negative relationship between the UI unemployment duration and wage effects, which holds empirically both in our sample and across studies, reconciling disparate wage-effect estimates. Empirically, UI raises wages by improving reemployment firms' quality and attenuating wage drops.
Keywords: unemployment insurance; job-search; wages (search for similar items in EconPapers)
JEL-codes: H5 J3 J6 (search for similar items in EconPapers)
Pages: 41 pages
New Economics Papers: this item is included in nep-dge, nep-eur, nep-ias, nep-lab and nep-pbe
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Published in: American Economic Review, 2017, 107(2), 527-561.
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Journal Article: Does Extending Unemployment Benefits Improve Job Quality? (2017)
Working Paper: Does Extending Unemployment Benefits Improve Job Quality? (2015)
Working Paper: Does Extending Unemployment Benefits Improve Job Quality? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp9034
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