Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149553
Authors: 
Nagl, Wolfgang
Weber, Michael
Year of Publication: 
2016
Series/Report no.: 
Ifo Working Paper 231
Abstract: 
We empirically investigate how two-tier unemployment compensation schemes affect the profile of re-employment hazards. We exploit the aggravation of an existing two-tier scheme in Germany in 2005 and estimate its impact on re-employment rates at different durations. For the short-term unemployed, the hazard rate increases and negative duration dependence declines. For the long-term unemployed, we find none and for certain groups of job seekers even negative impacts on the re-employment hazard. Our results indicate that two-tier unemployment compensation schemes might create a long-term unemployment trap: If employers rank applicants by their duration in unemployment, incentivizing all job seekers to exert higher search efforts may reduce the reemployment probabilities for the long-term unemployed.
Subjects: 
Unemployment insurance
two-tier unemployment compensation
unemployment duration
re-employment rate
Hartz reforms.
JEL: 
J64
J65
J68
Document Type: 
Working Paper

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