Benefit-Entitlement Effects and the Duration of Unemployment: An Ex-ante Evaluation of Recent Labour Market Reforms in Germany

Arbeitspapier

We analyse benefit-entitlement effects and the likely impact of the recent reform of the unemployment compensation system on the duration of unemployment in Germany on the basis of a flexible discrete-time hazard rate model estimated on pre-reform data from the German Socioeconomic Panel. We find (i) relatively strong benefit-entitlement effects for the unemployed who are eligible to means-tested unemployment assistance after the exhaustion of unemployment benefit, but not for those without such entitlement; (ii) that benefit-entitlement effects on hazard rates are not monotonic in time to benefit-exhaustion but rather occur around the month of benefit-exhaustion, and (iii) relatively small marginal effects of the amount of unemployment compensation on the duration of unemployment. Simulation results show that the recent labour market reform is unlikely to have a major impact on the average duration of unemployment in the population as a whole, but will significantly reduce the level of long-term unemployment among older workers.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SOEPpapers on Multidisciplinary Panel Data Research ; No. 46

Classification and Topics

• Classification: Wirtschaft ; Unemployment: Models, Duration, Incidence, and Job Search ; Unemployment Insurance; Severance Pay; Plant Closings ; Fiscal Policies and Behavior of Economic Agents: Household
• Subject: unemployment duration ; unemployment insurance ; benefit-entitlement effects ; German labour market reforms ; ex-ante evaluation ; hazard rate model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmitz, Hendrik ; Steiner, Viktor
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/150595
• Last update: 10.03.2025, 11:41 AM CET