In this paper, the authors use a recent policy change in the Netherlands to study how changes in search requirements for the older unemployed affected their transition rates to employment, retirement and sickness/disability. The reform, becoming effective on January 1st 2004, required the elderly to formally report their job search efforts to the employment office in order to avoid a (temporary) cut in benefits.
Before the new law was passed, unemployed were allowed to stop all search activity at the moment they turned 57.5. Estimating various duration models using difference-in-difference and regression discontinuity approaches, the authors find that for several groups of individuals that were affected by the policy change, the stricter search requirements did significantly increase their entry rate into employment. However, the authors also find evidence of a higher outflow to sickness/disability insurance, a presumably unwanted side-effect of the policy change.
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