The effect of unemployment benefits on re-employment rates: Evidence from the Finnish UI-benefit reform

Working Papers 229 Roope Uusitalo Roope, Jouko Verho

In January 2003, the unemployment benefits increased in Finland for workers with long employment histories. The average benefit increase was 15% for the first 150 days of unemployment spell. In this paper we evaluate the effect of benefit increase on the duration of unemployment by comparing the changes in the re-employment hazard profiles between the unemployed who became eligible to the increased benefits to a control group whose benefit structure remained unchanged. We find that benefit increase reduced re-employment hazards in the beginning of the unemployment spell but that the effect disappears after the period with increased benefits expires.

Published: 1.3.2007
ISBN: 978-952-209-040-9
ISSN: 1795-1801
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