Unemployment Insurance and the Family: Heterogeneous effects of benefit generosity on reemployment and economic precarity

We investigate how unemployment insurance generosity impacts re-employment and economic precarity by family type. Using Swiss longitudinal administrative data on income and household composition, and a regression discontinuity design for potential benefit duration, we examine differences between single households, primary earners, secondary earners, equal earners, as well as differences by gender and those with and without children. Overall, less generous unemployment insurance (shorter potential benefit duration) speeds up re-employment, but increases the risk of economic precarity, though the extent of these effects differs by family type. We find that shorter unemployment benefit duration increases economic pre-carity during the period with benefit cuts, especially for primary earners and those with children, groups with high financial responsibility for the household. There are no clear effects on precarity in the longer term. With respect to re-employment, we find that shorter benefit entitlement increases re-employment for all family types during the period with benefit cuts, while longer-term effects are stronger for single households, secondary and equal earners and people without children; i.e. those with lower financial responsibility for the household. We argue that those with high financial responsibility face large employment pressure regardless of unemployment insurance rules while those with lower financial responsibility have greater capacity to react to unemployment insurance rules.