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Age Discontinuity And Nonemployment Benefit Policy Evaluation Through The Lens Of Job Search Theory

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  • Bruno Decreuse
  • Guillaume Wilemme

Abstract

Recent papers use regression discontinuity designs (RDDs) based on age discontinuity to evaluate social assistance (SA) and unemployment insurance (UI) extension policies. Job search theory predicts that such designs generate biased estimates of the policy‐relevant treatment effect. Owing to market frictions, people below the age threshold modify their search behavior in expectation of future eligibility. We use a job search model to quantify the biases on various datasets in the literature. The impacts of SA benefits on employment are underestimated, whereas those of UI extensions on nonemployment duration are overestimated. The article provides insights for RDD evaluations of age‐discontinuous policies.

Suggested Citation

  • Bruno Decreuse & Guillaume Wilemme, 2025. "Age Discontinuity And Nonemployment Benefit Policy Evaluation Through The Lens Of Job Search Theory," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 66(1), pages 259-286, February.
    • Handle: RePEc:wly:iecrev:v:66:y:2025:i:1:p:259-286
    DOI: 10.1111/iere.12726
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    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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