of the variation in benefit quantities. Similarly, benefit duration is no longer an issue, since in most cases there is no time limit on social assistance/support recipiency. Hence, in dealing with social assistance/support benefits we consider the use of an indicator variable to be sufficient, although we also include benefit duration in some of the regressions."<sup>8</sup>

## **G. RESULTS**

# **Unemployment insurance, social assistance and unemployment duration**

76. We start the analysis by studying the relationship between different features of the unemployment insurance system and unemployment duration. In particular, we pay special attention to the duration of the benefits and to changes in the benefit quantity associated with the two-tier nature of the unemployment insurance system - i.e. high and low replacement ratios.

77. As a first pass, Table X presents separate unemployment spell distributions for those individuals who receive unemployment insurance and those who do not, using the Unemployment Registry. It can be seen that those with no unemployment insurance exit the Registry sooner than those with it: almost 50 percent of all spells with no unemployment insurance last less than three months, while this number is 21 percent for spells with unemployment insurance. Interestingly, this difference tends to disappear as we move towards longer spells. Given that benefit duration is limited, such pattern would be consistent with the existence of disincentive effects associated with recipiency. To explore this issue further, we explicitly account for the duration of benefits (Table XI), and find that those who receive unemployment insurance actually leave the Registry when or soon after their benefits come to an end.

78. However, we need to be cautious in interpreting this evidence in a causal manner. We observe the duration of the benefits actually received by the individual, rather than the duration of the benefits he was potentially entitled to. This implies that when the observed duration of the benefits is equal to the duration of the spell, we cannot distinguish a priori between the following two scenarios: (i) the worker exits the Registry because unemployment insurance benefits are exhausted, or (ii) observed benefits end because the unemployment spell finishes, even though the individual was still entitled to unemployment insurance.1<sup>9</sup> Yet, given that the average duration of benefits in the sample is 4.5 months, it seems reasonable to assume that the first story is more likely to apply in the case of long spells, whereas the second one best describes the experience of those with shorter spells.

79. In addition, part of the differences between recipients and non-recipients, in terms of unemployment duration, could be a product of the different demographic composition of both groups of workers. For instance, women may be less attached to the labor market than men, and therefore have a higher probability of exiting the Registry at any point in time,

> **18** Some workers do seem to move in and out of the SA/SS system over time. This could be due to a change in individual or family circumstances that affects the household eligibility for benefits.

> **19** This problem arises more frequently in the case of short spells. For instance, 84 percent of those with twomonth long unemployment spells receive Ul for the full two months. This number decreases to 48 and 8 percent for six and nine-month long spells respectively.

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