Unemployment Benefits and the Duration of Unemployment in East Germany

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 11.03.2003, 12:15 - 13:30


Presentation by 

Joachim Wolff (Institute for Employment Research (IAB), Nuremberg)


This paper studies the impact of unemployment benefits on unemployment duration for East Germany using data from the German Socio-Economic Panel. It concentrates on exit from unemployment into employment. Estimation results of a discrete-time hazard rate model imply that moderate cuts in the replacement rate raise the hazards by little. After six months of unemployment, the replacement rate has no effect on the hazards of men. The threat of periods of benefit sanction could explain this. The hazards are not generally declining in time until exhausting unemployment insurance (UI) benefits, but rise just prior to exhausting UI.

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