The Effect of Unemployment Insurance Payments on the Unemployment: Comparative Analysis of US and Germany cases
This econometric and theoretic analysis examines the impact of Unemployment Insurance benefits on unemployment looking at cases of the US Emergency Unemployment Insurance Program of 2008 and German Unemployment Insurance Program Hartz IV. The first part of the paper is an empirical work that uses Current Population Survey data to examine the duration of unemployment spells for those individuals who have regained employment after being unemployed and receiving unemployment compensation from a longitudinal sample of employed workers in 2014 and 2015. The key finding is that after the expiration of program the average duration of an unemployment spell decreased by .68 weeks. I also find that for both groups of workers (those who receive UI benefits and do not receive), the expiration of the program had a positive impact on their unemployment by decreasing the duration of the unemployment spell. The second part of the paper focuses on the theoretical analysis of the German case and identifies the main reasons for the successful implementation of the Hartz IV effect on the German economy. Besides identifying positive aspects of the UI program, it also focuses on negative effects of UI. The discussion parts provides the analytical analysis of the comparison of UI program in the two countries.