Nathan Lachapelle
IRES/LIDAM, UCLouvain
will give a presentation on
Introducing the degressivity of unemployment benefits: does it bring unemployed back to work
Abstract: We estimate the causal effect of unemployment benefits (UB) on the transition to work and job quality by exploiting a Belgian reform that changed a constant unemployment benefit profile into a declining one, but only for claimants of unemployment benefits with low previous labor market earnings. The peculiarity of the reform is that it introduces the degressivity in two different ways for two different groups of unemployed job seekers: one group benefits from an increase of their unemployment benefits during the first three months, while another group experiences both the increase of UB and a decrease later in the spell. Leveraging rich administrative data on a sample of new entrants into unemployment before and after the implementation of this reform, we use a difference-in-difference design to estimate the causal impact of this reform on the transition to work and job quality. We compare labor market outcomes of unemployed job seekers for which a declining benefit profile was introduced with job seekers who were not affected by the reform. Our main finding is that the reform increased the transition rate to salaried employment for unemployed job seekers affected by the drop of UB later in the spell, but not for the increase during the first three months. We also find no evidence that the reform affected job quality.