The effects of unemployment benefits: New advances in economic research
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School of Business |
Master's thesis
Authors
Date
2022
Department
Major/Subject
Mcode
Degree programme
Economics
Language
en
Pages
56
Series
Abstract
This thesis is a literature review of the economic research on the effects of unemployment benefits. Research has made important progress in recent years, as new empirical studies have been published. In some cases, new empirical evidence has significantly impacted the consensus view of the effects of unemployment benefits. The thesis provides an updated overview of the literature, with an emphasis on the articles published during the last ten years. The main results can be divided into three parts. First, the recent literature confirms the earlier findings that more generous unemployment benefits increase the duration of unemployment spells. Second, new empirical studies provide evidence that the effect of extending unemployment benefits on job match quality can be either positive, negative or zero. Third, the optimal time profile of unemployment benefits is now considered an unresolved question, as recent empirical studies have reached opposite results. The results underline the need for further empirical research regarding the effects on job match quality and the optimal benefit profile. The literature illustrates the development of econometric methods over the years. Early empirical studies often relied on the difference-in-differences strategy. Starting from the 2000s, the regression discontinuity design emerged as a popular approach in the literature.Description
Thesis advisor
Huttunen, KristiinaKeywords
unemployment, unemployment insurance, unemployment duration, job match quality