Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/90053 
Year of Publication: 
2013
Series/Report no.: 
IZA Discussion Papers No. 7650
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper offers quasi experimental evidence of the existence of spillover effects of UI extensions using a unique program that extended unemployment benefits drastically for a subset of workers in selected regions of Austria. We use non-eligible unemployed in treated regions, and a difference-in-difference identification strategy to control for preexisting differences across treated and untreated regions. We uncover the presence of important spillover effects: in treated regions, as the search effort of treated workers plummets, the job finding probability of untreated workers increases, and their average unemployment duration and probability of long term unemployment decrease. These effects are the largest when the program intensity reaches its highest level, then decrease and disappear as the program is scaled down and finally interrupted. We use this evidence to assess the relevance of different assumptions on technology and the wage setting process in equilibrium search and matching models and discuss the policy implications of our results for the EUC extensions in the US.
Subjects: 
unemployment insurance
benefit extension
market externality
macro effects
JEL: 
J65
J21
J22
Document Type: 
Working Paper

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