Partial unemployment insurance benefits and the transition rate to regular work
BibTeX
@article{kyyra2010partial,
title={Partial unemployment insurance benefits and the transition rate to regular work},
author={Kyyr{\"a}, Tomi},
journal={European economic review},
volume={54},
number={7},
pages={911--930},
year={2010},
publisher={Elsevier}
}
Abstract
In Finland, unemployed workers who are looking for a full-time job but take up a part-time or very short full-time job may qualify for partial unemployment benefits. In exchange for partial benefits, these applicants must continue their search of regular full-time work. This study analyzes the implications of working on partial benefits for subsequent transitions to regular employment. The timing-of-events approach is applied to distinguish between causal and selectivity effects associated with the receipt of partial benefits. The results suggest that partial unemployment associated with short full-time jobs facilitates transitions to regular employment. Also part-time working on partial benefits may help men (but not women) in finding a regular job afterwards.
Notes and Excerpts
partial benefits amounted to 7% of the unemployment benefit expenditure in Finland and Belgium, 14% in Greece and Norway, 16% in Italy and 29% in Sweden (Haataja, 2007)
In the US labor market, UI recipients who take up a part-time job can earn up to a given amount (‘‘the disregard’’) with no reduction in benefits, after which benefits are reduced on a dollar-for-dollar basis. By exploiting variation in the amount of earnings disregarded across states and over time, McCall (1996) shows that an increase in the disregard increases the transition rate from full-time unemployment to subsidized part-time work during the first three months of unemployment, and thereby lowers the expected duration of non-employment
Other papers mentioned: Munts (1970), McCall (1996), Gerfin and Lechner (2002), Gerfin et al. (2005) and Lalive et al. (2008)
They restrict their analysis to people who start UI spell in full unemployment. Because those who work reduced hours at original job may be faking the forced reduction.
They estimate coeficients for likelihood function of “hazard rate” of transitioning to PUI or regular work.