Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215400 
Year of Publication: 
2020
Series/Report no.: 
Kiel Working Paper No. 2149
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
How the provision of unemployment benefits affects employment and unemployment is a debated issue. In this paper, we aim at complementing theoretical and empirical contributions to this debate with a laboratory experiment: We simulate a job market with search effort and labor force participation decisions while varying the maximum length of unemployment benefit eligibility. Our results reveal two separable, opposing effects: Individuals within the labor force search with lower effort when unemployment benefits are extended. However, individuals are more likely to participate in the labor force and to actively search for a job. Concerning employment, the second effect dominates so that unemployment benefits raise employment.
Subjects: 
Job Search
Employment
Labor Force Participation
Unemployment Insurance
Economic Recession
Laboratory
Experiment
JEL: 
E70
J21
J65
Document Type: 
Working Paper

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