Do low-wage workers react less to longer unemployment benefits? Quasi-experimental evidence

  • Centeno M
  • Novo Á
  • 12

    Readers

    Mendeley users who have this article in their library.
  • 1

    Citations

    Citations of this article.

Abstract

The fact that unemployed workers have different abilities to smooth consumption entails heterogeneous responses to extended unemployment benefits. Our empirical exercise explores a quasi-experimental setting generated by an increase in the benefits entitlement period. The results suggest a hump-shape response of unemployment duration over the one-year pre-unemployment wage distribution; individuals at the bottom and top of the wage distribution reacted less than those in the interquartile range. This behaviour of job searchers is consistent with labour supply models with unemployment insurance and savings. It questions the optimality of very long entitlement periods to target the unemployment experiences of low-wage workers.

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Authors

  • Mário Centeno

  • Álvaro A. Novo

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free