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The Duration and Outcome of Unemployment Spells - The Role of Economic Incentives

Link to article:

[PDF]

Authors:

Røed Knut, and Zhang, Tao

Year:

2002

Reference:

Memorandum
Number in series: 6

Summary

We investigate how transitions from unemployment are affected by economic incen-tives and spell duration. Based on unique Norwegian register data that exhibit the rar-ity of random-assignment-like variation in economic incentives, the causal parameters are identified without reliance on distributional assumptions or functional form re-strictions. We find that the hazard rates are negatively affected by the replacement ratio, but that the size of these effects varies considerably among individuals. There is strong negative duration dependence in the employment hazard and positive duration dependence in the ‘discouragement’ hazard. The employment hazard rises substan-tially in the months just prior to benefit exhaustion.

JEL:

C41, J64

Keywords:

competing risks, unemployment duration, random assignment

Project:

Oppdragsgiver: AAD
Oppdragsgivers prosjektnr.:
Frisch prosjekt: 1312 - Unemployment transitions