"In 1998 the Slovenian UI system was drastically reformed. The reform reduced the potential duration of unemployment … that the reduction in potential benefit duration had a positive effect on the exit rate out of unemployment -- both to … employment and to other destinations -- at various durations of unemployment spells and for many categories of unemployed workers …

"This paper studies the effect of unemployment benefits on the unemployment and subsequent employment duration using … heterogeneity. We find that recipients, relative to non-recipients, face lower exit rates from unemployment, while an additional … month in unemployment increases their subsequent employment stability. This positive correlation between previous …

. The threat effect is shown to reduce average unemployment duration by approximately three weeks. The implications of this …