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Frontloading the Unemployment Benefit: An Empirical Assessment

Author

Listed:
  • Attila Lindner

    (University College London, CERS-HAS, IZA, IFS)

  • Balazs Reizer

    (PhD student at the Central European University)

Abstract
In November 2005, the Hungarian government frontloaded the unemployment benefit path, while kept constant the total benefit amount that could be collected over the unemployment spell. We estimate the effect of this reform on non-employment duration using an interrupted time series design. We find that non-employment duration fell by 1.5 weeks after November 2005, while reemployment wages and the duration of new jobs remained the same. We show that the decrease in non-employment duration was large enough to make the benefit reform revenue neutral. Our welfare evaluation for this reform is positive: frontloading increased job finding, it made some of the unemployed better off, and did not cost anything to the taxpayers.

Suggested Citation

  • Attila Lindner & Balazs Reizer, 2016. "Frontloading the Unemployment Benefit: An Empirical Assessment," CERS-IE WORKING PAPERS 1627, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1627
    as

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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Guo, Audrey & Johnston, Andrew C., 2020. "The Finance of Unemployment Compensation and its Consequence for the Labor Market," IZA Discussion Papers 13330, Institute of Labor Economics (IZA).
    2. Gerard Domènech-Arumí & Silvia Vannutelli, 2022. "Bringing Them In or Pushing Them Out? The Labor Market Effects of Pro-cyclical Unemployment Assistance Changes," NBER Working Papers 30301, National Bureau of Economic Research, Inc.
    3. Tomi Kyyrä, 2023. "The effects of unemployment assistance on unemployment exits," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(6), pages 1457-1480, December.
    4. Andrew C. Johnston & Alexandre Mas, 2018. "Potential Unemployment Insurance Duration and Labor Supply: The Individual and Market-Level Response to a Benefit Cut," Journal of Political Economy, University of Chicago Press, vol. 126(6), pages 2480-2522.
    5. Astrid Kunze & Marta Palczyńska & Iga Magda, 2023. "The employment effects of a wage subsidy for the young during an economic recovery," IBS Working Papers 04/2023, Instytut Badan Strukturalnych.
    6. Peter Ganong & Pascal Noel, 2019. "Consumer Spending during Unemployment: Positive and Normative Implications," American Economic Review, American Economic Association, vol. 109(7), pages 2383-2424, July.
    7. Árpád Ábrahám & João Brogueira de Sousa & Ramon Marimon & Lukas Mayr, 2022. "On the design of a european unemployment insurance system," Economics Working Papers 1826, Department of Economics and Business, Universitat Pompeu Fabra.
    8. Ábrahám, Árpád & Brogueira de Sousa, João & Marimon, Ramon & Mayr, Lukas, 2023. "On the design of a European Unemployment Insurance System," European Economic Review, Elsevier, vol. 156(C).
    9. Ahn, Taehyun, 2018. "Assessing the effects of reemployment bonuses on job search: A regression discontinuity approach," Journal of Public Economics, Elsevier, vol. 165(C), pages 82-100.

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    More about this item

    Keywords

    unemployment; declining unemployment benefits; welfare analysis;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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