We examine empirically the impacts of labor market policies – in terms of unemployment insurance (UI) and active labor market programs (ALMP) – on the duration and outcome of job search and on the quality of a subsequent job. We find that time invested in job search tends to pay off in the form of higher earnings once a job match is formed. More generous UI raises expected unemployment duration, while improving the quality of the resultant job. Participation in ALMP raises the probability of finding a job and the level of expected earnings, but at the cost of lengthening job search.
Filed under “for later use”. The Swedish blog Ekonomistas accidentally touched on a very hotly disputed element in Danish politics right now – the maximum period of unemployment benefits. Long story short: The government and the Confederation of Danish Industries want to cut the period from four to two years.
An analysis of Norwegian unemployment insurance (where coverage was extended from 80 to 156 weeks in 1997) suggest that there are some complicated effects from a longer period of coverage: On the one hand people were unemployed for longer periods, on the other hand they gained better-paid jobs and held them for a longer time. Or if you please: There were better matches between job-seekers and jobs.
So the question is if just cutting the benefit period would bring out more qualified labour. (And then there is the entire thing about controls, etc, etc.)