unemployment; unemployment duration; unemployment insurance; benefit replacement rate; benefit duration; retirement; disability; culture; regional unemployment
Beatrix Eugster, Rafael Lalive, Andreas Steinhauer, Josef Zweimüller (2011), The Demand for Social Insurance: Does Culture Matter?, in Economic Journal
, 121(556), F413-F448.
Rafael Lalive, Jan C. van Ours, Josef Zweimüller (2011), Equilibrium Unemployment and the Duration of Unemployment Benefits, in Journal of Population Economics
, 24, 1385-1409.
Rafael Lalive, Alois Stutzer (2010), Approval of Equal Rights and Gender differences in Well-Being, in Journal of Population Economics
, 23(3), 933-962.
Rafael Lalive, Alejandra Cattaneo (2009), Social Interactions and Schooling Decisions, in Review of Economics and Statistics
, 91(3), 457-477.
Charles Efferson, Rafael Lalive, Ernst Fehr (2008), The Coevolution of Cultural Groups and In-Group Favoritism, in Science
, 26(321), 1844-1849.
In economically advanced welfare states, the workforce is generally insured against income losses due to job loss. The main income replacement program offering protection is unemployment insurance. Yet, whereas the existing literature has investigated the incentive effects of the design of unemployment insurance for the duration of unemployment, little is known about the fate of job losers who have exhausted unemployment insurance. Clearly not all job seekers re-enter the labor market. Some of them leave UI to enter other social insurance programs, for example disability insurance or some form of early retirement. The effect of different unemployment schemes (unemployment benefit level and duration) on the transition rates to disability insurance has yet not been studied. Disability insurance and retirement schemes are the among the most important social insurance programs in all OECD countries. Switzerland, for instance, spent more than 50 % of the cost of all social insurance programs in 2007 on disability and retirement programs. It is therefore crucial to investigate the link between these social insurance schemes and unemployment insurance regulations. Moreover, possible links between insurance schemes can affect job search behavior of the unemployed. If benefit duration is in fact infinite with some probability, due to possible transitions to other insurance schemes, individuals will search less hard or are less willing to accept a proposed job. The incentive effects of finite unemployment benefit durations are therefore undermined by the possibility to enter disability insurance or early retirement. Switzerland offers an excellent research frame to investigate this subject. First, individual data on unemployment spells can be linked to information on earnings (from the central pension register), and information on disability and retirement pensions over the period from 1991 to 2004. This data source is therefore ideally suited to understanding the role of financial incentives in UI for entry into other insurance programs. This provides the unique opportunity to follow individuals after their unemployment spell on an administrative basis, as opposed to survey data. Second, the regulations for disability insurance are on a federal level, however, admission for individual cases is decided over by each canton. Therefore, the probability of entering disability insurance with a given handicap is different from one canton to other cantons. Third, unemployed individuals might react different to incentives, depending on their culture. Using the language barrier, which does separate cultures but does not separate institutions, we can investigate if the reaction to incentives does differ between cultural groups. This is an important question, as it can influence optimal policy design. This project proposal follows up on the existing proposal on "Culture, Incentives, and Unemployment" (No. 100014-120356). The project has contributed to understanding the role of culture and financial incentives in affecting duration of unemployment. This proposal complements the existing analyses in providing evidence on the role of financial incentives in unemployment insurance for exits to non-job destinations.