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Long-Term Effects of Extended Unemployment Benefits for Older Workers

Author

Listed:
  • Kyyrä, Tomi

    (VATT, Helsinki)

  • Pesola, Hanna Onerva

    (VATT Institute for Economic Reserach, Helsinki)

Abstract
This paper examines the long-term effects of extended unemployment benefits that older unemployed can collect until retirement in Finland. We consider a reform that increased the age threshold of this scheme from 55 to 57 for people born in 1950 or later. Our regression discontinuity estimates show that postponing eligibility by two years increased employment over the remaining working career by seven months. Despite the corresponding reduction in unemployment, we find no evidence of significant effects on mortality or receipt of disability and sickness benefits, nor on the spouse's labor supply. We also compute the fiscal impact of the reform taking into account income taxes and social security contributions paid and benefits received. The reform increased net income transfers by 15,000 Euros over the 10-year period for an average individual.

Suggested Citation

  • Kyyrä, Tomi & Pesola, Hanna Onerva, 2017. "Long-Term Effects of Extended Unemployment Benefits for Older Workers," IZA Discussion Papers 10839, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10839
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    Cited by:

    1. Kyyrä, Tomi & Pesola, Hanna, 2020. "The effects of unemployment benefit duration: Evidence from residual benefit duration," Labour Economics, Elsevier, vol. 65(C).
    2. Kruse, Herman & Myhre, Andreas, 2021. "Early Retirement Provision for Elderly Displaced Workers," MPRA Paper 118689, University Library of Munich, Germany, revised 21 Sep 2023.
    3. Octave Brouwer & Ilan Tojerow, 2024. "Old-age unemployment and labour supply: an application to Belgium," Empirical Economics, Springer, vol. 67(1), pages 253-287, July.
    4. Galecka-Burdziak, Ewa & Góra, Marek & Jessen, Jonas & Jessen, Robin & Kluve, Jochen, 2021. "The Effects of Shortening Potential Benefit Duration: Evidence from Regional Cut-Offs and a Policy Reform," IZA Discussion Papers 14340, Institute of Labor Economics (IZA).
    5. Arranz, José M. & García-Serrano, Carlos, 2023. "Assistance benefits and unemployment outflows of the elderly unemployed: The impact of a law change," The Journal of the Economics of Ageing, Elsevier, vol. 26(C).
    6. Vladislav Flek & Martin Hála & Martina Mysíková, . "Assessing the Job-Finding Probability of Older and Prime-Age Unemployed Workers," Prague Economic Papers, University of Economics, Prague, vol. 0.
    7. Yashiro, Naomitsu & Kyyrä, Tomi & Hwang, Hyunjeong & Tuomala, Juha, 2020. "Technology, Labour Market Institutions and Early Retirement: Evidence from Finland," IZA Discussion Papers 13990, Institute of Labor Economics (IZA).
    8. Vladislav Flek & Martin Hála & Martina Mysíková, 2020. "Assessing the Job-Finding Probability of Older and Prime-Age Unemployed Workers," Prague Economic Papers, Prague University of Economics and Business, vol. 2020(4), pages 424-444.
    9. Korpela, Heikki, 2024. "Furlough unemployment," Working Papers 167, VATT Institute for Economic Research.
    10. Kruse, Herman & Myhre, Andreas, 2021. "Early Retirement Provision for Elderly Displaced Workers," MPRA Paper 109431, University Library of Munich, Germany.

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    More about this item

    Keywords

    early retirement; unemployment insurance; layoffs;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • 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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