Unemployment benefits and parental resources: what helps the young unemployed with labour market integration?

Abstract

This article deals with the question of how different resources affect the labour market integration of the young unemployed. Previous research has often focused on the effects of unemployment compensation benefits on labour market outcomes. However, for young unemployed people additional parental resources may be even more important. The article examines the effects both of unemployment benefits and family-related resources. The main hypothesis it advances is that individuals who have access to different resources will enter more stable jobs after unemployment than those lacking such different kinds of support. Using data from a longitudinal study on youth unemployment in Germany, I find that subsequent job duration increases with the receipt of unemployment benefits but decreases with parental support. Accordingly, benefits actually improve post-unemployment job tenure, whereas parental support functions rather as a ‘safety net’ enabling young people to quit a job.