Do unemployment benefit legislative changes affect job finding? Evidence from the Spanish 1992 UI reform act.
IdentifiersPermanent link (URI): http://hdl.handle.net/10017/11523
Instituto de Estudios Fiscales
AffiliationUniversidad de Alcalá. Departamento de Estadística, Estructura Económica y Organización Económica Internacional
Papeles de trabajo. Instituto de Estudios Fiscales, nº 13, 2008. ISSN 1579-6663
Discretetime duration models
España-Política de empleo
Using a rich administrative dataset on unemployment insurance benefit recipients, the current work analyses the Spanish 1992 Reform Act implemented to reduce the generosity of the unemployment compensation system –in particular, a decrease in the level of unemployment insurance benefits and in entitlement duration. For this purpose, we compare unemployment insurance exit rates for two large sub-samples of individuals: the first sub-sample includes those who started receiving unemployment insurance benefits in 1991 (the pre-reform sub-sample) and the second sub-sample includes those who did so during 1993 (the post-reform sub-sample). Results indicate that these legislative changes had a positive though modest effect on individuals’ exit rate from unemployment: the 10-percent decrease in unemployment insurance benefit levels was associated with a 5-percent increase in the transition rate out of unemployment, while the reduction implemented in the potential unemployment insurance duration implied a 2-percent increase in the hazard rate out of unemployment.