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

Author

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  • Bruno Decreuse

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, AMU - Aix Marseille Université)

  • Guillaume Wilemme

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, AMU - Aix Marseille Université)

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, 2024. "Age Discontinuity And Nonemployment Benefit Policy Evaluation Through The Lens Of Job Search Theory," Post-Print hal-04718007, HAL.
    • Handle: RePEc:hal:journl:hal-04718007
    DOI: 10.1111/iere.12726
    Note: View the original document on HAL open archive server: https://hal.science/hal-04718007v1
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