Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/216590
Authors: 
Lichter, Andreas
Schiprowski, Amelie
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8194
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper studies how the potential duration of unemployment benefits affects individuals' job search behavior and re-employment outcomes. We exploit an unexpected reform of the German unemployment insurance scheme in 2008, which increased the potential benefit duration from 12 to 15 months for recipients of age 50 to 54. Based on detailed survey data and difference-in-differences techniques, we estimate that one additional month of benefits reduces the number of filed applications by around 10% on average over the first two months of unemployment. Treatment effects on the reservation wage are positive but statistically insignificant. In a complementary analysis, we use social security data to investigate how the reform affected re-employment outcomes. The difference-in-differences estimates yield an elasticity of 0.24 (0.1) additional months in unemployment (nonemployment) per additional month of potential benefits. A cautious back-of-the-envelope calculation reveals substantial returns to early search effort.
Subjects: 
unemployment insurance
job search
re-employment outcomes
natural experiment
JEL: 
D83
I38
J64
J68
Document Type: 
Working Paper

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