published in: Scottish Journal of Political Economy, 2008, 55 (4), 393 - 419
This paper uses a unique Portuguese data set to examine the effect of unemployment benefit
receipt and maximum duration of benefits on escape rates from unemployment. The focus is
on the time profile of transitions out of unemployment. The novel aspect of the study resides
in its identification of six destination states, namely, open-ended employment, fixed-term
contracts, part-time work, government-provided jobs, self employment, and labor force
withdrawal. Strong evidence of disincentive effects of the unemployment benefit system is
reported. This result obtains both in general and for the various destination states, among
which some marked behavioral differences are detected.
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