Quasi-experimental Evidence on Take-up and the Value of Unemployment Insurance

A large fraction of the eligible workers does not claim for unemployment benefits. The existing literature, focusing on the determinants of take-up (TU), has shown that it is sensitive to both the costs and the benefits of claiming. This paper shows that variation in TU behavior can be used to determine the workers’ value of unemployment insurance. Using Austrian data, we first estimate how eligibility for severance payments and extended unemployment benefits a↵ect TU. Using a simple model, we show that these estimates can be used to compute bounds on a money metric equivalent to workers’ intertemporal utility from claiming compared to not claiming. Among claimants, we estimate that the value is above 2.5 monthly wages for the median individual. Moreover, our metric shows that low wage workers benefit more from unemployment insurance. For the non-claimants, our results point towards large costs of collecting benefits.