New Insights into Unemployment Duration and Post Unemployment Earnings in Germany*

Abstract

Building on non-stationary search theory (Mortensen, 1977; Van den Berg, 1990), this article estimates the effects of UB on unemployment durations and future earnings using unique administrative data in Germany. We apply censored Box–Cox quantile regression. Our results imply that the length of entitlement shows only a weak effect on unemployment duration for entitlement lengths up to 12 months and no effect on post unemployment earnings. There are noticeable effects on exits from unemployment for entitlement lengths above 12 months. A high wage replacement rate for low-wage earners is associated with a longer duration of unemployment and higher post unemployment earnings.