Umeå Economic Studies,
Umeå University, Department of Economics

Abstract: Does Unemployment Insurance affect how employed workers search for new jobs? We provide novel evidence by combining administrative data on the universe of Norwegian workers and firms with a regression kink design. A marginal increase in benefits lowers job-to-job transitions, increases unemployment incidence, and lowers future earnings. These effects are stronger for workers with higher predicted unemployment risk and align with job search models where workers systematically move towards safer jobs. In an equilibrium job search model calibrated to match these empirical effects, employed workers’ responses account for 45 percent of the net fiscal costs of a marginal benefit expansion.

Keywords: On the job search; Unemployment Insurance; Regression kink design; Unemployment Risk

JEL-codes: G33; G52; H31; H55; J31; J65

Language: English

77 pages, October 24, 2025

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