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The effect of unemployment benefits on re-employment rates: Evidence from the Finnish UI-benefit reform

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  • Roope Uusitalo
  • Jouko Verho

Abstract

In January 2003, the unemployment benefits increased in Finland for workers with longemployment histories. The average benefit increase was 15% for the first 150 days of unemployment spell. In this paper we evaluate the effect of benefit increase on the duration of unemployment by comparing the changes in the re-employment hazard profiles between the unemployed who became eligible to the increased benefits to a control group whose benefit structure remained unchanged. We find that benefit increase reduced re-employment hazardsin the beginning of the unemployment spell but that the effect disappears after the period withincreased benefits expires.

Suggested Citation

  • Roope Uusitalo & Jouko Verho, 2007. "The effect of unemployment benefits on re-employment rates: Evidence from the Finnish UI-benefit reform," Working Papers 229, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    • Handle: RePEc:pst:wpaper:229
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    References listed on IDEAS

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    Cited by:

    1. Laszlo Goerke & Markus Pannenberg & Heinrich Ursprung, 2010. "A positive theory of the earnings relationship of unemployment benefits," Public Choice, Springer, vol. 145(1), pages 137-163, October.
    2. Niklas Potrafke, 2010. "Labor market deregulation and globalization: empirical evidence from OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 545-571, September.
    3. Uusitalo, Roope & Verho, Jouko, 2010. "The effect of unemployment benefits on re-employment rates: Evidence from the Finnish unemployment insurance reform," Labour Economics, Elsevier, vol. 17(4), pages 643-654, August.
    4. Mr. Martin Schindler & Ms. Mariya Aleksynska, 2011. "Labor Market Regulations in Low-, Middle- and High-Income Countries: A New Panel Database," IMF Working Papers 2011/154, International Monetary Fund.

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    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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