Replication data for: The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden
Principal Investigator(s): View help for Principal Investigator(s) Jonas Kolsrud; Camille Landais; Peter Nilsson; Johannes Spinnewijn
Version: View help for Version V1
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Project Citation:
Kolsrud, Jonas, Landais, Camille, Nilsson, Peter, and Spinnewijn, Johannes. Replication data for: The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden. Nashville, TN: American Economic Association [publisher], 2018. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113144V1
Project Description
Summary:
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This paper provides a simple, yet robust framework to evaluate the time profile of benefits paid during an unemployment spell. We derive sufficient-statistics formulae capturing the marginal insurance value
and incentive costs of unemployment benefits paid at different times during a spell. Our approach allows us to revisit separate arguments for inclining or declining profiles put forward in the theoretical
literature and to identify welfare-improving changes in the benefit profile that account for all relevant arguments jointly. For the empirical implementation, we use administrative data on unemployment, linked
to data on consumption, income, and wealth in Sweden. First, we exploit duration-dependent kinks in the replacement rate and find that, if anything, the moral hazard cost of benefits is larger when paid
earlier in the spell. Second, we find that the drop in consumption affecting the insurance value of benefits is large from the start of the spell, but further increases throughout the spell. In trading off insurance
and incentives, our analysis suggests that the flat benefit profile in Sweden has been too generous overall. However, both from the insurance and the incentives side, we find no evidence to support the
introduction of a declining tilt in the profile.
Scope of Project
JEL Classification:
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D82 Asymmetric and Private Information; Mechanism Design
E21 Macroeconomics: Consumption; Saving; Wealth
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
J64 Unemployment: Models, Duration, Incidence, and Job Search
J65 Unemployment Insurance; Severance Pay; Plant Closings
D82 Asymmetric and Private Information; Mechanism Design
E21 Macroeconomics: Consumption; Saving; Wealth
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
J64 Unemployment: Models, Duration, Incidence, and Job Search
J65 Unemployment Insurance; Severance Pay; Plant Closings
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