Scandinavian Working Papers in Economics
Working Paper Series,
Stockholm University, Swedish Institute for Social Research
No 3/2002: Unemployment Duration, Incentives and Institutions - A Micro-Econometric Analysis Based on Scandinavian Data
Knut Røed (), Peter Jensen () and Anna Thoursie ()
Additional contact information
Knut Røed: The Ragnar Frisch Centre for Economic Research, Oslo, Norway, Postal: Gaustadalleen 21 , 0349 Oslo, Norway.
Peter Jensen: Department of Economics, The Aarhus School of Business, Denmark
Anna Thoursie: Swedish Trade Union Confederation, Stockholm, Sweden
Abstract: Based on a combined register database for Norwegian and Swedish unemployment spells, we use the ‘between-countries-variation’ in the unemployment insurance systems to identify causal effects. The elasticity of the job hazard rate with respect to the benefit replacement ratio is around -1.0 in Norway and -0.5 in Sweden. The limited benefit duration period in Sweden has a large positive impact on the hazard rate, despite generous renewal options through participation in labour market programs. Compulsory program participation seems to operate as a ‘stick’, rather than a ‘carrot’, and is therefore an efficient tool for counteracting moral hazard problems in the benefit system.
Keywords: Unemployment spells; unemployment compensation; non-parametric duration analysis.
28 pages, May 14, 2002
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