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Does extending unemployment benefits improve job quality?
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2015 (English)Report (Other academic)
Abstract [en]

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.

Place, publisher, year, edition, pages
2015.
Series
, CEPR Working Paper Series, 10568
Keyword [en]
job search, regression discontinuity design, unemployment insurance, wages
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:su:diva-125232OAI: oai:DiVA.org:su-125232DiVA: diva2:892128
Available from: 2016-01-08 Created: 2016-01-08 Last updated: 2016-02-01Bibliographically approved

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Nekoei, Arash
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Institute for International Economic Studies
Economics

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