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How do extended benefits affect unemployment duration? A regression discontinuity approach

Author: Rafael Lalive, And

Published in: Journal of Econometrics, vol. 142, no. 2, pp. 785-806

Summary of Working paper 2006:8

This paper studies a program that extends the maximum duration of unemployment bene¯ts
from 30 weeks to 209 weeks. Interestingly, this program is targeted to individuals aged 50
years or older, living in certain eligible regions in Austria. In the evaluation, I use sharp
discontinuities in treatment assignment at age 50 and at the border between eligible regions and
control regions to identify the e®ect of extended bene¯ts on unemployment duration. Results
indicate that the duration of job search is prolonged by at least .09 weeks per additional week
of bene¯ts among men, whereas unemployment duration increases by at least .32 weeks per
additional week of bene¯ts among women. The salient di®erences between men and women
are consistent with the lower minimum age for early retirement applying to women.
JEL-Classi¯cation: C41, J64, J65
Keywords: bene¯t duration, unemployment duration, early retirement, regression discontinuity
¤I would like to thank David Autor, Josef ZweimÄuller and seminar participants in Berne, Frankfurt an der
Od

This paper studies a program that extends the maximum duration of unemployment benefits from 30 weeks to 209 weeks. Interestingly, this program is targeted to individuals aged 50 years or older, living in certain eligible regions in Austria. In the evaluation, I use sharp discontinuities in treatment assignment at age 50 and at the border between eligible regions and control regions to identify the effect of extended benefits on unemployment duration. Results indicate that the duration of job search is prolonged by at least .09 weeks per additional week of  benefits among men, whereas unemployment duration increases by at least .32 weeks per additional week of benefits among women. The salient differences between men and women are consistent with the lower minimum age for early retirement applying to women.

Keywords: benefit duration, unemployment duration, early retirement, regression discontinuity
JEL-Classification: C41, J64, J65

Research areas