Journal of Population Economics

, Volume 24, Issue 4, pp 1385–1409 | Cite as

Equilibrium unemployment and the duration of unemployment benefits

  • Rafael Lalive
  • Jan C. van Ours
  • Josef Zweimüller
Original Paper

Abstract

This paper uses microdata to evaluate the impact on the steady-state unemployment rate of an increase in maximum benefit duration. We evaluate a policy change in Austria that extended maximum benefit duration and use this policy change to estimate the causal impact of benefit duration on labor market flows. We find that the policy change leads to a significant increase in the steady-state unemployment rate and, surprisingly, most of this increase is due to an increase in the inflow into rather than the outflow from unemployment.

Keywords

Benefit duration Unemployment flows Equilibrium unemployment 

JEL Classification

C41 J64 J65 

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Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  • Rafael Lalive
    • 1
  • Jan C. van Ours
    • 2
  • Josef Zweimüller
    • 3
  1. 1.Faculty of Business and EconomicsUniversity of Lausanne, CEPR and IZALausanneSwitzerland
  2. 2.Department of Economics, CentERTilburg University, CEPR and IZATilburgThe Netherlands
  3. 3.Institute for Empirical Research in EconomicsUniversity of Zurich, CEPR and IZAZurichSwitzerland

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