Benefit entitlement and the labor market: evidence from a large-scale policy change
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.
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abolished adverse labor market age group analysis analyzed Austrian social security based on Austrian benefit duration Benefit Entitlement benefit extension CATHERWOOD LIBRARY cohort control regions DiDiD difference in unemployment duration of unemployment early retirement effect of REBP Effect of Unemployment effects of extended employment and unemployment employment ratio Exit status Extended Benefit Program firms inflow into unemployment Jurajda Labor Economics labor force participation labor market conditions labor market outcomes Layoffs long-term sickness Mean completed duration median Mortensen Non-steel workers non-treated regions non-treated spells older workers Panel Data percentage points period Pissarides Public Economics REBP affect REBP on employment REBP was introduced REBP-period REBP-regions regional differences regular job regular unemployment benefits relative search theory social security data steel workers Table treated and non-treated treated regions treated spells unem unemployed Unemployment Duration unemployment entrants unemployment inflow rate unemployment insurance system unemployment rate unemployment spell University of Zurich weeks Winter-Ebmer