Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/145519
Authors: 
Arni, Patrick
Liu, Xingfei
Year of Publication: 
2016
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2016: Demographischer Wandel - Session: Evaluation of Labor Market Policies A20-V2
Abstract: 
Does introducing or abolishing a policy measure affect the eligible individuals in the same way - just with opposite signs or are the reform effects of moving to a more or less generous policy symmetric? This is an important question that standard program evaluation results cannot answer and policy designers may thus implicitly assume symmetry of the effects. To address this issue, it is necessary to have access to a specific policy shock, which preferably implies both positive and negative news to the target group. In this paper, we try to answer the proposed policy evaluation question with opposite signs by exploring a large-scale quasi-experiment in unemployment insurance with imperfectly informed UI claimers: Job seekers are confronted with either an upgrade or a downgrade of their benefit eligibility within their unemployment spell, without being initially fully informed about the change. They face, however, exactly the same size of treatment: an increase or decrease of the potential benefit duration (PBD) by 200 days. We first compare the treatment effects of these update cases with the reference case, in which individuals are fully informed about their PBD. We identify the treatment effect around the threshold of age 25 where PBD rules change in the Swiss UI system. We find substantial differences in the treatment effects across cases with different expectations on benefit change. This applies to job finding and earnings outcomes. Secondly, the effects are asymmetric both quantitatively and qualitatively. The differences are consistent with patterns of loss aversion or of consumption commitment behavior. We also show that policy uncertainty reinforces the job finding effect of a downgrade shock.
JEL: 
J68
D83
J64
Document Type: 
Conference Paper

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