The Hungarian Unemployment Insurance Benefit System and Incentives to Return to Work

This paper analyses the impact of the Hungarian unemployment
insurance (UI) benefit system on the speed of exit from
unemployment to regular employment. The duration analysis relies on
unemployment spells from two inflow cohorts, which are administered
under distinct UI rules. Thus, it exploits a natural experiment to
identify disincentive effects. Kaplan-Meier estimates suggest that
the benefit reform did not significantly change the transition
rates. Moreover, a semi-parametric analysis cannot find remarkable
disincentive effects but an entitlement effect. The hazards of men
and women rise somewhat in the last two months before they run out
of UI benefit.