Économie et Statistique n° 343 - 2001 Unemployment Benefits and Returning to Work - Housing in the European Union - Children's Pocket Money - A New Breakdown of Public Expenditure
The Effect of the Single Degressive Benefit on Returning to Work
The effect of the unemployment benefits time curve on the rate of return to work by job seekers is studied based on a comparison of two successive regulations. The rules in force from 1986 to 1992, before the introduction of the Single Degressive Benefit (SDB), provided for a single drop in the level of benefits. The SDB introduced in 1992, however, provides for steady decreases in benefits. The duration model estimates show that, under the pre-1992 system, the return-to-work rate rose sharply towards the end of the full-rate benefits period. This finding holds mainly for the job seekers with the highest past wages. The introduction of the SDB levelled off the return-to-work rate time curve. The estimated highly significant deviation between the probabilities of remaining unemployed under the old and new system is only partly ascribable to macroeconomic variations. There remains a difference that can be explained by the change in benefits time curves. In other words, the type of degression implemented from 1992 to 1996 probably slowed down the return to work.