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The Effects of Unemployment Assistance on Unemployment Exits

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  • Kyyrä, Tomi

Abstract

Many countries have a two-tiered unemployment compensation system which provides earnings-related unemployment insurance for a limited period of time and less generous unemployment assistance thereafter. This study evaluates the effects of a reform in Finland that increased the level of unemployment assistance by 22%. The reform led to a drop of 9% in the unemployment exit hazard, which can be attributed to fewer exits to both employment and inactivity. The implied elasticities suggest that a 10% increase in unemployment assistance reduces the unemployment exit hazard by 4% and the job finding hazard by 6%. These effects are relatively small compared to the existing evidence on the effects of unemployment insurance benefits.

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  • Kyyrä, Tomi, 2021. "The Effects of Unemployment Assistance on Unemployment Exits," Working Papers 143, VATT Institute for Economic Research.
    • Handle: RePEc:fer:wpaper:143
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    References listed on IDEAS

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    6. Aedín Doris & Donal O’Neill & Olive Sweetman, 2020. "Does Reducing Unemployment Benefits during a Recession Reduce Youth Unemployment?: Evidence from a 50 Percent Cut in Unemployment Assistance," Journal of Human Resources, University of Wisconsin Press, vol. 55(3), pages 902-925.
    7. Jonas Kolsrud & Camille Landais & Peter Nilsson & Johannes Spinnewijn, 2018. "The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden," American Economic Review, American Economic Association, vol. 108(4-5), pages 985-1033, April.
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    More about this item

    Keywords

    unemployment assistance; labor market subsidy; hazard rate; unemployment duration; Social security; taxation and inequality; Labour markets and education; J64; J68; Sosiaaliturva; Työmarkkinat;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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