scholarly journals The Effect of Unemployment Benefits and Nonemployment Durations on Wages

2016 ◽  
Vol 106 (3) ◽  
pp. 739-777 ◽  
Author(s):  
Johannes F. Schmieder ◽  
Till von Wachter ◽  
Stefan Bender
Keyword(s):  
Unemployment Insurance ◽  
Instrumental Variable ◽  
Reservation Wage ◽  
Unemployment Benefits ◽  
Reservation Wages ◽  
Wage Effects ◽  
Key Policy

We estimate that unemployment insurance (UI) extensions reduce reemployment wages using sharp age discontinuities in UI eligibility in Germany. We show this effect combines two key policy parameters: the effect of UI on reservation wages and the effect of nonemployment durations on wage offers. Our framework implies if UI extensions do not affect wages conditional on duration, then reservation wages do not bind. We derive resulting instrumental variable estimates for the effect of nonemployment durations on wage offers and bounds for reservation wage effects. The effect of UI on wages we find arises mainly from substantial negative nonemployment duration effects. (JEL J31, J64, J65)

scholarly journals Does Extending Unemployment Benefits Improve Job Quality?

2017 ◽  
Vol 107 (2) ◽  
pp. 527-561 ◽  
Author(s):  
Arash Nekoei ◽  
Andrea Weber
Keyword(s):  
Unemployment Insurance ◽  
Negative Relationship ◽  
Unemployment Duration ◽  
Duration Dependence ◽  
Regression Discontinuity Design ◽  
Matching Function ◽  
Unemployment Benefits ◽  
Wage Effect ◽  
Wage Effects ◽  
Positive Effect

Contrary to standard search models predictions, past studies have not found a positive effect of unemployment insurance (UI) on reemployment wages. We estimate a positive UI wage effect exploiting an age-based regression discontinuity design in Austria. A search model incorporating duration dependence predicts two countervailing forces: UI induces workers to seek higher-wage jobs, but reduces wages by lengthening unemployment. Matching-function heterogeneity plausibly generates a negative relationship between the UI unemployment-duration and wage effects, which holds empirically in our sample and across studies, reconciling disparate wage-effect estimates. Empirically, UI raises wages by improving reemployment firm quality and attenuating wage drops. (JEL J31, J64, J65)

Paradoxes of reservation wage setting in the Russian labor market. Part I

2016 ◽  
pp. 5-27
Author(s):  
R. Kapeliushnikov ◽  
A. Lukyanova
Keyword(s):  
Labor Market ◽  
Empirical Studies ◽  
Reservation Wage ◽  
Wage Setting ◽  
Reservation Wages ◽  
Monitoring Survey ◽  
Main Determinants ◽  
Subjective Estimates ◽  
Objective Indicators

Using panel data from the Russian Longitudinal Monitoring Survey for 2006-2014, the paper investigates reservation wages setting in the Russian labor market. The sample includes non-employed individuals wishing to get a job (both searchers and non-searchers). The first part of the paper provides a survey of previous empirical studies, describes data and analyzes subjective estimates of reservation wages in comparison with various objective indicators of actual wages. The analysis shows that wage aspirations of the majority of Russian non-employed individuals are overstated. However their wage expectations are rather flexible and decrease rapidly as the search continues that prevents high long-term unemployment. The second part of the paper provides an econometric analysis of main determinants of reservation wage and its impact on probability of re-employment and wages on searchers’ new jobs.

scholarly journals Front-Loading the Unemployment Benefit: An Empirical Assessment

2020 ◽  
Vol 12 (3) ◽  
pp. 140-174 ◽  
Author(s):  
Attila Lindner ◽  
Balázs Reizer
Keyword(s):  
Unemployment Insurance ◽  
Policy Reform ◽  
Behavioral Responses ◽  
Sharp Change ◽  
Unemployment Benefit ◽  
Unemployment Benefits ◽  
Cost Increase ◽  
Empirical Assessment ◽  
Pareto Improving

We estimate the effect of front-loading unemployment benefit payments on nonemployment duration and reemployment wages. Exploiting a sharp change in the path of benefits for those who claimed unemployment benefits after November 1, 2005 in Hungary, we show that nonemployment duration fell by two weeks, while reemployment wages rose by 1.4 percent as a result of front-loading. We show that these behavioral responses were large enough to offset the mechanical cost increase of the unemployment insurance. We argue that our results indicate that benefit front-loading was a Pareto improving policy reform as both unemployed and employed workers were made better off. (JEL D91, J31, J64, J65)

scholarly journals Civic Virtue and Labor Market Institutions

2009 ◽  
Vol 1 (1) ◽  
pp. 111-145 ◽  
Author(s):  
Yann Algan ◽  
Pierre Cahuc
Keyword(s):  
Labor Market ◽  
Unemployment Insurance ◽  
Civic Virtue ◽  
Employment Protection ◽  
Labor Market Institutions ◽  
Unemployment Benefits ◽  
Public Insurance ◽  
Civic Attitudes ◽  
Civic Virtues ◽  
Cross Country

We argue civic virtue plays a key role in explaining the design of public insurance against unemployment risks by solving moral hazard issues which hinder the efficiency of unemployment insurance. We show, in a simple model, that economies with stronger civic virtues are more prone to provide insurance through unemployment benefits rather than through job protection. We provide cross-country empirical evidence of a strong correlation between civic attitudes and the design of unemployment benefits and employment protection in OECD countries over the period 1980 to 2003. We then use an epidemiological approach to estimate the existence of a potential causal relationship from inherited civic virtue to labor market insurance institutions. (JEL: J41, J65, J68, Z13)

Der Einfluss der Agenda 2010 auf die Arbeitslosigkeitsdauer

2004 ◽  
Vol 53 (1) ◽  
Author(s):  
Björn Christensen
Keyword(s):  
Social Welfare ◽  
Unemployment Insurance ◽  
Search Model ◽  
Transition Rates ◽  
Transfer Payments ◽  
Insurance System ◽  
Reservation Wages ◽  
Dynamic Search ◽  
Unemployment Insurance System ◽  
Agenda 2010

AbstractThis paper examines the impacts on reservation wages of unemployed persons and on transition in employment due to the reform of the unemployment insurance system in Germany in the course of the Agenda 2010. An dynamic search-model is developed, on which reservation wages are simulated for different groups of unemployed. Afterwards, increases in the transition rates in employment are forecasted due to the reductions in reservation wages. It is shown that the reform of the unemployment transfer payments mainly affect unemployed persons with a high income before unemployment. For these persons the transition rates in employment are increased by 5% to 9% if they are eligible for social welfare. For unemployed persons without eligibility for social welfare the transition rates in employment are increased by 9% to 22%.

scholarly journals Assessing the Welfare Effects of Unemployment Benefits Using the Regression Kink Design

2015 ◽  
Vol 7 (4) ◽  
pp. 243-278 ◽  
Author(s):  
Camille Landais
Keyword(s):  
Moral Hazard ◽  
Labor Supply ◽  
Unemployment Insurance ◽  
Welfare Effects ◽  
Time Profile ◽  
Unemployment Benefits ◽  
Search Effort ◽  
Benefit Level ◽  
The Us ◽  
Regression Kink Design

I show how, in the tradition of the dynamic labor supply literature, one can identify the moral hazard effects and liquidity effects of unemployment insurance (UI) using variations along the time profile of unemployment benefits. I use this strategy to investigate the anatomy of labor supply responses to UI. I identify the effect of benefit level and potential duration in the regression kink design using kinks in the schedule of benefits in the US. My results suggest that the response of search effort to UI benefits is driven as much by liquidity effects as by moral hazard effects. (JEL D82, J22, J65)

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