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Estimating incentive and welfare effects of nonstationary unemployment benefits

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Launov, Andrey [University of Mainz, Germany] Wälde, Klaus [University of Mainz, Germany] Biewen, Martin [Centre for Structural Econometrics, U.K.]

The distribution of unemployment duration in our equilibrium matching model with spell-dependent unemployment benefits displays time-varying exit rates. Building on semi-Markov processes, we translate these rates into an expression for the aggregate unemployment rate. Structural estimation using German microdata allows us to discuss the effects of an unemployment benefit reform (Hartz IV). The reform reduced unemployment by less than 0.1 percentage points. Contrary to general beliefs, the net wage for most skill and regional groups increased. Taking the insurance effect of unemployment benefits into account, however, the reform is welfare reducing for 76% of workers.© (2013) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Document type Article de périodique (Journal article) – Article de recherche
Access type Accès restreint
Publication date 2013
Language Anglais
Journal information "International Economic Review" - Vol. 54, no. 4, p. 1159-1198 (2013)
Peer reviewed yes
Publisher Wiley-Blackwell Publishing, Inc.
e-issn 1468-2354
issn 0020-6598
Publication status Publié
Affiliation UCL - SSH/LIDAM/IRES - Institut de recherches économiques et sociales
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Bibliographic reference Launov, Andrey ; Wälde, Klaus ; Biewen, Martin. Estimating incentive and welfare effects of nonstationary unemployment benefits. In: International Economic Review, Vol. 54, no. 4, p. 1159-1198 (2013)
Permanent URL http://hdl.handle.net/2078.1/160541