Political Institutions and Labor Market Reform: The Case of Unemployment Benefit Duration

Labor market reform has been high on the political agenda in the advanced democracies for at least two decades. One type of reform that is favored by many economists and international economic organizations is the reduction of unemployment benefit duration in order to push the unemployed to look for and accept new jobs. This paper, which is based on a new dataset compiled for this project, examines reforms of unemployment benefit duration in approximately thirty advanced democracies, including most of the democracies in Central and Eastern Europe. We show that political institutions and the composition of governing coalitions have important effects on the manner in which unemployment benefit systems are reformed, particularly on the extent to which "demanding" reforms are combined with "enabling" or "positive" activation measures.