abolished the dependence of unemployment insurance benefits on the elapsed unemployment duration and simultaneously introduced … unemployment duration is positive and significant. Neglecting selectivity leads to an underestimation of the effects in absolute …

German unemployment insurance system and resulted in a significant reduction in unemployment benefits for the long …-term unemployed. In this paper, we use an incomplete-market model with search unemployment to evaluate the macro-economic and welfare …-run (noncyclical)unemployment rate in Germany by 1.4 percentage points. We also find that the welfare of employed households increases …