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 (SOEP). 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) non-monotonic benefit-entitlement effects on hazard rates with pronounced spikes around the month of benefit-exhaustion, and (iii) relatively small marginal effects of the amount of unemployment compensation on the duration of unemployment. Our 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: IZA Discussion Papers ; No. 2681

Classification and Topics

• Classification: Wirtschaft
• Subject: Arbeitslosenversicherung ; Reform ; Langzeitarbeitslosigkeit ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmitz, Hendrik ; Steiner, Viktor
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/34219
• URN: urn:nbn:de:101:1-2008041498
• Last update: 10.03.2025, 11:42 AM CET