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Does an increase in unemployment income lead to longer unemployment spells?

Evidence using Danish unemployment assistance data

Ott Toomet

Institut for Økonomi, Århus Universitet 2005.Working Papers 40 s.
Bogomtale fra forlaget.

Danish unemployment assistance depends on age; it increases by 70% when unemployed individuals turn 25. This feature is used to identify the impact of income on the unemployment-to-employment hazard rate. A mixed proportional hazard framework based on a 10% representative Danish registry data set is used. The results indicate that the income effect for females is negative and significant, corresponding to an income elasticity of -0.4. The effect for males is positive but insignifcant.