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Does Extending Unemployment Benefits Improve Job Quality?
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
Number of Authors: 2
2017 (English)In: The American Economic Review, ISSN 0002-8282, E-ISSN 1944-7981, Vol. 107, no 2, 527-561 p.Article in journal (Refereed) Published
Abstract [en]

Contrary to standard search models predictions, past studies have not found a positive effect of unemployment insurance (UI) on reemployment wages. We estimate a positive UI wage effect exploiting an age-based regression discontinuity design in Austria. A search model incorporating duration dependence predicts two countervailing forces: UI induces workers to seek higher-wage jobs, but reduces wages by lengthening unemployment. Matching-function heterogeneity plausibly generates a negative relationship between the UI unemployment-duration and wage effects, which holds empirically in our sample and across studies, reconciling disparate wage-effect estimates. Empirically, UI raises wages by improving reemployment firm quality and attenuating wage drops.

Place, publisher, year, edition, pages
2017. Vol. 107, no 2, 527-561 p.
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:su:diva-142525DOI: 10.1257/aer.20150528ISI: 000393993600008OAI: oai:DiVA.org:su-142525DiVA: diva2:1094241
Available from: 2017-05-09 Created: 2017-05-09 Last updated: 2017-05-09Bibliographically approved

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