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Market Externalities of Large Unemployment Insurance Extension Programs
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Journal Article
Market Externalities of Large Unemployment Insurance Extension Programs
2015
Overview
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.
Publisher
American Economic Association,American Economic Assoc
Subject
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