Market externalities of large unemployment insurance extension programs

Lalive, Rafael, Landais, Camille ORCID: 0000-0002-9534-680X and Zweimüller, Josef (2015) Market externalities of large unemployment insurance extension programs. American Economic Review, 105 (12). pp. 3564-3596. ISSN 0002-8282

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Abstract

We provide evidence that unemployment insurance affects equilibrium conditions in the labor market, which creates significant market externalities. We provide a framework for identification of such equilibrium effects and implement it using the Regional Extension Benefit Program in Austria which extended the duration of UI benefits for a large group of eligible workers in selected regions of Austria. We show that non-eligible workers in REBP regions have higher job finding rates, lower unemployment durations, and a lower risk of long-term unemployment. We discuss the implications of our results for optimal UI policy.

Item Type:	Article
Official URL:	http://www.vanderbilt.edu/AEA/
Additional Information:	© 2015 American Economic Association
Divisions:	Economics
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification:	H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J64 - Unemployment: Models, Duration, Incidence, and Job Search
Date Deposited:	01 Dec 2015 16:55
Last Modified:	31 Oct 2024 06:21
URI:	http://eprints.lse.ac.uk/id/eprint/64566

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