Market Externalities of Large Unemployment Insurance Extension Programs

• Autores: Rafael Lalive, Camille Landais, Josef Zweimüller
• Localización: American economic review, ISSN 0002-8282, Vol. 105, Nº 12, 2015, págs. 3564-3596
• Idioma: inglés
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• Resumen

  • 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 (REBP) 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. (JEL E24, J64, J65, R23)