The effects of unemployment insurance on labour supply and search outcomes
08 February 2010
This paper evaluates the impact of large changes in the duration of unemployment insurance (UI) in different economic environments on labor supply, job matches, and search behavior. The authors shows that differences in eligibility thresholds by exact age give rise to a valid regression discontinuity design, which they implement using administrative data on the universe of new unemployment spells and career histories over twenty years from Germany. The authors find that increases in UI have small to modest effects on non-employment rates, a result robust over the business cycle and across demographic groups. Thus, large expansions in UI during recessions do not lead to lasting increases in unemployment duration, nor can they explain differences in unemployment durations across countries. They do not find any effect of increased UI duration on average job quality, but show that the mean potentially confounds differential effects on job search across the distribution of UI duration. However, it appears that for a majority of UI beneficiaries increases in UI duration may lead to small declines in wages.
IAB-Discussion Paper 4/2010
In 2009, flexible working time and short-time work safeguarded more than a million jobs
02 February 2010
For the most part, flexible working times absorbed the brunt of the economic crisis on the German labour market in 2009, the Institute for Employment Research (IAB) reports. Employees' average annual working time decreased by 3.2 per cent, for instance though short-time work and the reduction of credit hours on working time accounts. "In figures, this decrease corresponds to roughly 1.2 million jobs saved," according to the labour market researchers Eugen Spitznagel and Susanne Wanger.
Brief overview
Determinants of lifetime unemployment
28 January 2010
The empirical literature on unemployment almost exclusively focuses on the duration of distinct unemployment spells. In contrast the authors use a large German administrative micro data set for the time span 1975-2004 to investigate individual lifetime unemployment (defined as the total length of all unemployment spells over a 25-year period). This new perspective enables them to answer questions regarding the long-term distribution and determinants of unemployment for West German birth cohorts 1950-1954. They find that lifetime unemployment is highly unevenly distributed and employ censored quantile regressions to show that, for men, pursuing a disadvantageous occupation early in the professional career leads to a significantly higher amount of lifetime unemployment.
IAB-Discussion Paper 3/2010
The long-term impact of job displacement in Germany during the 1982 recession on earnings, income, and employment
19 January 2010
The paper shows that workers displaced from their stable jobs during mass-layoffs in the 1982 recession in Germany suffered permanent earnings losses of 10-15% lasting at least 15 years. These estimates are obtained using data and methodology comparable to similar studies for the United States. Using the advantages of the German data, the authors also show that while reduction and recovery in time worked plays a role in explaining earnings losses during the first ten years, the majority of the long-run loss is due to a decline in wages. They also show that even the generous German unemployment insurance system replaced only a small fraction of the total earnings loss. These findings suggest that job displacements can lead to large and lasting reductions in income even in labor markets with tighter social safety nets and lower earnings inequality.
IAB-Discussion Paper 1/2010
Fixing the leak
17 December 2009
From 2002 - 2004, the German government passed several laws that curtailed the generosity of the unemployment compensation system. One of the most ambitious changes was a considerable reduction in unemployment benefit entitlement lengths for the older unemployed, which was effective during 2006 and 2007. We apply a difference-in-differences approach to show that the highly disputed reform induced a considerable decline in unemployment incidence among older workers. It thus sealed an important leak in the unemployment insurance system. Furthermore, we find a strong anticipation effect; unemployment entries of elderly workers peaked during the months preceding the reform.
IAB-Discussion Paper 25/2009