Do Benefit Hikes Damage Job Finding? Evidence from Swedish Unemployment Insurance Reforms

Abstract

In 2001 and 2002, Sweden introduced several unemployment insurance reforms. A major innovation in the first reform was the introduction of a two-tiered benefit structure for some unemployed individuals. This system involved supplementary compensation during the first 20 weeks of unemployment. The 2002 reform retained the two-tiered benefit structure but involved also substantial benefit hikes for spells exceeding 20 weeks. This paper examines how these reforms affected transitions from unemployment to employment. We take advantage of the fact that the reforms had quasi-experimental features where the 'treatments' differed considerably among unemployed individuals. We find that the reforms had strikingly different effects on job finding among men and women. The two reforms in conjunction are estimated to have increased the expected duration of unemployment among men but to have decreased the duration of unemployment among women. The overall effect on the duration of unemployment is not statistically different from zero. However, the reforms reduced job finding among men who remained unemployed for more than 20 weeks. Copyright 2007 The Authors; Journal compilation 2007 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd..

Housing Wealth and Aggregate Consumption in Sweden

“…The quarterly nondurable consumption series used in this paper refers to the sum of nondurable goods and services minus gross rents, which are the actual rents paid by renters and the imputed rents of housing services consumed by homeowners (Item 1210 in SNA 95). 15 The quarterly data of non-durable consumption are available only after 1993.…”

“…The assets include cash, sum of savings and deposits, bonds, 14 The construction of the Swedish National Accounts follows the European national accounts system legislated by the EU (ESA 95), which in turn is based on the UN recommendation (SNA 93). 15 Item 1210, gross rents, includes: 0411 -actual rentals paid by tenants exclusive of heating; 0412 -rentals actually paid for secondary residences and tenant-owners; 0421 -imputed rentals of owner-occupiers exclusive of heating; 0422 -imputed rentals for secondary residences exclusive of heating; and 0432 -services for the maintenance and repair of the dwelling. I thank Ylva Petersson at Statistics Sweden for clarifying this for us.…”

How Changes in Benefits Entitlement Affect the Duration of Unemployment

“…Recent studies are also in this range. Bennmarker et al (2004) for example find for Sweden an elasticity of around 0.6, while Roed and Zhang (2003) estimate elasticities for Norway of around 0.95 for males and around 0.35 for females. For the effect of the PBD similar estimates are available.…”

“…Many studies find a sharp increase in the exit rate out of unemployment just before benefits expire. 2 Several explanations have been put forward to explain such spikes. Mortensen (1977) provides a theoretical explanation based on a job search model with household production.…”

Who suffers from unemployment? The role of health and skills

“…We therefore also run regressions where regions are not accounted for. 15 Bennmarker et al (2007) documented that the median unemployment spell in Sweden is about 13 weeks. Spells may, however, not only end because individuals find employment but also because they decide to leave the labor market.…”