Optimal Design of Unemployment Insurance: New Theories and Evidence
Friday, Jan. 6, 2017 10:15 AM – 12:15 PM
Hyatt Regency Chicago, Grand Suite 3
- Chair: Johannes F. Schmieder, Boston University
Unemployment Insurance Generosity and Aggregate Employment
AbstractThis paper examines the impact of unemployment insurance (UI) on aggregate employment by exploiting cross-state variation in the maximum benefit duration during the Great Recession. Comparing adjacent counties located in neighboring states, we find no statistically significant impact of increasing UI generosity on aggregate employment. Our point estimates are uniformly small in magnitude, and the most precise estimates rule out employment-to-population ratio reductions in excess of 0.5 percentage points from the UI extension. We show that a moderately sized fiscal multiplier can rationalize our findings with the small negative labor supply impact of UI typically found in the literature.
Does Intensive Job Search Assistance Help Job Seekers Find and Keep Jobs?
AbstractWe study the effects of intensive job search assistance (JSA) targeted to long-term unemployed in Geneva. In 2006, Geneva randomly assigned job seekers to the program, and we follow them from two years prior to five years after assignment to treatment. Treated job seekers leave unemployment faster, especially around six months after starting intensive JSA. Intensive JSA does not affect the total number of job seekers who ever find a job. However, treated job seekers are more likely to leave employment, especially after one year of employment – the period needed to qualify for unemployment benefits. Intensive JSA shortens both job search duration and employment duration. Neither differences in active labor market programs nor re-employment wages rationalize lower job stability. Intensive JSA may have led job seekers to accept jobs that were less well matched, triggering higher employment loss once unemployment benefit eligibility is re-established. Intensive JSA is expensive, and the short-term employment gains do not compensate for the extra cost.
Front-Loading the Unemployment Benefit: An Empirical Assessment
AbstractIn November 2005, the Hungarian government frontloaded the unemployment benefit path, while keeping the total benefit amount that could be collected over the unemployment spell constant. We estimate the effect of this reform on non-employment duration using a regression discontinuity research design, where we exploit the sharp change in the benefit-path for those who claimed benefit after 1st of November 2005. We find that non-employment duration fell by 1.5 weeks after November 2005, while reemployment wages and the duration of new jobs remained the same. We show that the decrease in non-employment duration was large enough to make the benefit reform revenue neutral. Our welfare evaluation for this reform is positive: frontloading increased job finding, it made some of the unemployed better off, and did not cost anything to the taxpayers.
University of California-Berkeley
Johannes F. Schmieder,
University of Pennsylvania
- H2 - Taxation, Subsidies, and Revenue
- J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers