@TechReport{iza:izadps:dp11300, author={Petrunyk, Inna and Pfeifer, Christian}, title={Shortening the Potential Duration of Unemployment Benefits and Labor Market Outcomes: Evidence from a Natural Experiment in Germany}, year={2018}, month={Jan}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={11300}, url={https://www.iza.org/index.php/publications/dp11300}, abstract={This paper explores the effects of a major reform of unemployment benefits in Germany on the labor market outcomes of individuals with some health impairment. The reform induced a substantial reduction in the potential duration of regular unemployment benefits for older workers. This work analyzes the reform in a wider framework of institutional interactions, which allows us to distinguish between its intended and unintended effects. Our results provide causal evidence for a significant decrease in the number of days in unemployment benefits and increase in the number of days in employment. However, they also suggest a significant increase in the number of days in unemployment assistance, granted upon exhaustion of unemployment benefits. Transitions to unemployment assistance represent an unintended effect, limiting the success of a policy change that aims to increase labor supply via reductions in the generosity of the unemployment insurance system.}, keywords={policy evaluation;labor market reform;unemployment insurance;difference-in-differences}, }