TY  - RPRT
        AU  - Schmieder, Johannes F.
AU  - Wachter, Till von
AU  - Bender, Stefan
        TI  - The Causal Effect of Unemployment Duration on Wages: Evidence from Unemployment Insurance Extensions
        PY  - 2014/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 8700
        UR  - https://www.iza.org/index.php/publications/dp8700
        AB  - This paper estimates the causal effect of long-term unemployment on wages. Job search theory implies that if Unemployment Insurance (UI) extensions do not affect wages conditional on the month of unemployment exit, then reservation wages do not bind on average. Then, UI extensions affect mean wages only through unemployment durations and are valid instrumental variables (IV). Using a regression discontinuity design, we find that UI extensions in Germany reduced job searchers' reemployment wages on average, but did not affect wages conditional on unemployment duration. Resulting IV estimates imply substantial negative effects of unemployment duration on wages of 0.8% per month.
        KW  - long-term unemployment
KW  - wage losses
KW  - unemployment insurance
        ER  -