Benefit-Entitlement Effects and the Duration of Unemployment: An Ex-ante Evaluation of Recent Labour Market Reforms in Germany

Hendrik Schmitz and Viktor Steiner

No 46, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: We analyse benefit-entitlement effects and the likely impact of the recent reform of the unemployment compensation system on the duration of unemployment in Germany on the basis of a flexible discrete-time hazard rate model estimated on pre-reform data from the German Socioeconomic Panel. We find (i) relatively strong benefit-entitlement effects for the unemployed who are eligible to means-tested unemployment assistance after the exhaustion of unemployment benefit, but not for those without such entitlement; (ii) that benefit-entitlement effects on hazard rates are not monotonic in time to benefit-exhaustion but rather occur around the month of benefit-exhaustion, and (iii) relatively small marginal effects of the amount of unemployment compensation on the duration of unemployment. Simulation results show that the recent labour market reform is unlikely to have a major impact on the average duration of unemployment in the population as a whole, but will significantly reduce the level of long-term unemployment among older workers.

Keywords: unemployment duration; unemployment insurance; benefit-entitlement effects; German labour market reforms; ex-ante evaluation; hazard rate model (search for similar items in EconPapers)
JEL-codes: H31 J64 J65 (search for similar items in EconPapers)
Pages: 27 : Anh. p.
Date: 2007
New Economics Papers: this item is included in nep-eec, nep-ias and nep-lab
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Citations: View citations in EconPapers (13)

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Related works:
Working Paper: Benefit-Entitlement Effects and the Duration of Unemployment: An Ex-ante Evaluation of Recent Labour Market Reforms in Germany (2007)
Working Paper: Benefit-Entitlement Effects and the Duration of Unemployment: An Ex-Ante Evaluation of Recent Labour Market Reforms in Germany (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwsop:diw_sp46

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