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Frontloading the Unemployment Benefit: An Empirical Assessment

Lindner, A; Reizer, B; (2020) Frontloading the Unemployment Benefit: An Empirical Assessment. American Economic Journal: Applied Economics , 12 (3) pp. 140-174. Green open access

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Abstract

We estimate the effect of frontloading unemployment benefit payments on non-employment duration and re-employment wages. Exploiting a sharp change in the path of benefits for those who claimed unemployment benefit after November 1 2005 in Hungary, we show that nonemployment duration fell by two weeks, while re-employment wages rose by 1.4 percent as result of frontloading. We show that these behavioral responses were large enough to offset the mechanical cost increase of the unemployment insurance. We argue that our results indicate that benefit frontloading was a Pareto improving policy reform as both unemployed and employed workers were made better off.

Type: Article
Title: Frontloading the Unemployment Benefit: An Empirical Assessment
Open access status: An open access version is available from UCL Discovery
Publisher version: https://www.aeaweb.org/articles?id=10.1257/app.201...
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10081315
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