Template-Type: ReDIF-Paper 1.0
Author-Name: Diogo Britto
Author-X-Name-First: Diogo 
Author-X-Name-Last: Britto
Author-Email: diogo.britto@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore

Title: Unemployment Insurance and the Duration of Employment: Theory and Evidence from a Regression Kink Design.
Abstract: Can unemployment insurance (UI) affect the behavior of employed workers and the duration of their employment spells? I apply a regression kink design to address this question using data from the
Brazilian labor market. Exploiting the UI schedule, I find that a 1% higher potential benefit level increases job duration by around 0.35%. This result is driven by the fact that a higher potential benefit level
reduces the probability of job quits, which are not covered by UI. I develop a simple model showing that the positive effect on employment duration implies that the optimal benefit is higher than
otherwise and delivers a simple welfare formula based on sufficient statistics. A simple calibration exercise shows that this elasticity affects welfare with a similar magnitude as the well-known elasticity of
unemployment duration to the benefit level.
Length: 87
Creation-Date: 2016-09
File-URL: http://dipartimenti.unicatt.it/economia-finanza-def048.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: def048
Classification-JEL: I38, J65. 
Keywords: Unemployment Insurance, Employment Duration, Regression Kink Design, Sufficient Statistics Welfare Analysis.
Handle: RePEc:ctc:serie1:def048