Do low-wage workers react less to longer unemployment benefits? Quasi-experimental evidence

Arbeitspapier

The fact that unemployed workers have different abilities to smooth consumption entails heterogeneous responses to extended unemployment benefits. Our empirical exercise explores a quasi-experimental setting generated by an increase in the benefits entitlement period. The results point towards a hump-shape response of unemployment duration over the one-year pre-unemployment wage distribution; individuals at the bottom and at the top of the wage distribution reacted less than those in the interquartile range. This behavior of job searchers is consistent with labor supply models with unemployment insurance and savings. It questions the optimality of very long entitlement periods to target the unemployment experiences of low-wage workers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6992

Classification and Topics

• Classification: Wirtschaft ; Unemployment Insurance; Severance Pay; Plant Closings ; Unemployment: Models, Duration, Incidence, and Job Search ; Time Allocation and Labor Supply
• Subject: unemployment insurance ; unemployment duration ; entitlement extension ; liquidity effect ; Arbeitslosigkeit ; Dauer ; Niedriglohn ; Arbeitslosenversicherung ; Schätzung ; Portugal

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Centeno, Mario ; Novo, Alvaro A.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/67329
• Last update: 10.03.2025, 11:42 AM CET