When Institutions Interact: How the Effects of Unemployment Insurance are Shaped by Retirement Policies

Matthew Gudgeon, Pablo Guzman, Johannes Schmieder, Simon Trenkle and Han Ye

No 31807, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show that the non-employment effects of unemployment insurance (UI) for older workers depend critically on retirement policy. Using German data, we document large bunching in UI inflows at the age that allows workers to claim their pension following UI expiration. Inflows respond strongly to several UI and pension reforms. We probe the implications of these behavioral responses using a dynamic model and find that Germany’s UI and retirement policy changes had substantial effects on the unemployment rate of older workers. Furthermore, we calculate large fiscal externalities from extending UI for older workers, especially under generous retirement policies.

JEL-codes: E24 J2 J26 J6 J63 J64 J65 J68 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-age, nep-dge, nep-eur and nep-lab
Note: AG LS PE
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Working Paper: When Institutions Interact: How the Effects of Unemployment Insurance are Shaped by Retirement Policies (2025)
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