The effects of UI benefits on unemployment and subsequent outcomes: Evidence from a kinked benefit rule
Kyyrä, Tomi; Pesola, Hanna (2016-12-12)
Valtion taloudellinen tutkimuskeskus
Julkaisun pysyvä osoite on
This paper analyzes the effects of unemployment insurance (UI) benefits on unemployment exits and subsequent labor market outcomes. We exploit a piecewise linear relationship between the previous wage and UI benefits in Finland to identify the causal effects of the benefit level by using a regression kink design. According to our findings, higher benefits lengthen nonemployment spells and decrease time spent in part-time unemployment, and thus result in more full-time unemployment. Also the re-employment probability and postunemployment wage are negatively affected. The results for the duration of the first post-unemployment job are not conclusive, but in total both employment and earnings in the two years following the beginning of the unemployment spell decrease with higher benefits.
Social security, taxation and inequality, Labour markets and education
unemployment, unemployment benefit, unemployment duration, unemployment insurance
- VATT Working Papers 
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