The incentive effects of tightened UIB entitlement rules – Empirical evidence from three Nordic countries

Working Papers 242 Merja Kauhanen, Iben Bolvig, Inés Hardoy Inés, Reija Lilja, Marianne Røed Marianne

In this paper we analyse the impact of reforms that tightened the entitlement rules for UIB in a
similar fashion in three Nordic countries Denmark, Finland and Norway in 1997. We identify
the effect of the reforms in UIB entitlement conditions by exploiting the quasi-experimental
feature of the reforms. Our results show that after the reform, only in Denmark the unemployed
job seekers, who were affected by the reform, had a higher overall likelihood to exit to open
employment. In Finland, positive reform effects were only found among those subgroups of
unemployed job seekers who had relatively high demand in the labour market. In Norway, we
found positive employment effects for males but not for females. Moreover, the overall pattern
is an increased likelihood of exiting from the labour market.

Keywords: Job search, unemployment insurance
Published: 1.4.2008
JEL: J64, J65
ISBN: 978-952-209-056-0
ISSN: 1795-1801
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