Heterogeneity of the unemployment insurance system: lazyness or simply income effects?∗

It has been recently aknowledged that the impact of the unemployment insurance system can be very heterogeneous. We present evidence of this heterogenity for two important labor market outcomes related: unemployment duration and reemployment wages. We exploit a quasi-experimental setting and show that longer spells of unemployment, arise particularly in younger cohorts, if given additional entitlement periods. In terms of reemployment wages, the estimates suggest a negative impact on young individuals ’ wages, noticeable only at quartiles above the median of the previous income. The effect of added subsidized search time for older individuals is slightly positive and clearly driven by those in the fourth quartile of the previous income distribution. This means that reforms of the system should target these age groups in differentiated ways