published in: Journal of Public Economics, 2004, 88 (12), 2587-2616
The potential duration of benefits is generally viewed as an important determinant of
unemployment duration. This paper evaluates a unique policy change that prolonged
entitlement to regular unemployment benefits from 30 weeks to a maximum of 209 weeks for
elderly individuals in certain regions of Austria. In the evaluation, we explicitly account for the
fact that the program was an endogenous policy response to a crisis affecting individuals with
severe labor market problems. The main results are: (i) REBP reduced the transition rate to
jobs by 17 %; (ii) accounting for endogenous policy adoption is important and quantitatively
significant.
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