Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 09-1: The Effect of Receiving Supplementary UI Benefits on Unemployment Duration

Tomi Kyyrä (), Pierpaolo Parrotta () and Michael Rosholm ()
Additional contact information
Tomi Kyyrä: Government Institute for Economic Research, Postal: Government Institute for Economic Research - VATT, Helsinki, Finland
Pierpaolo Parrotta: Department of Economics, Aarhus School of Business, Postal: Frichshuset Hermodsvej 22, 8230 Åbyhøj , Denmark
Michael Rosholm: Department of Economics, Aarhus School of Business, Postal: Frichshuset Hermodsvej 22, 8230 Åbyhøj , Denmark

Abstract: We consider the consequences of working part-time on supplementary unemployment insurance benefits in the Danish labour market. Following the “timing-of-events” approach we estimate causal effects of subsidized part-time work on the hazard rate out of unemployment insurance benefit receipt. We find evidence of a negative lock-in effect and a positive post-treatment effect, both of which vary across individuals. The resulting net effect on the expected unemployment duration is positive for some groups (e.g. married women) and negative for others (e.g. young workers)

Keywords: Unemployment benefits; Part-time work; Lock-in effect; Treatment effect; Duration analysis

JEL-codes: C41; J65

42 pages, January 1, 2009

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