Unemployment duration, unemployment benefits, and labor market programs in Sweden

Standard search theory as well as some empirical evidence suggest that an unemployed individual's probability of entering employment increases as he approaches the time when unemployment benefits are due to expire. This pattern may not carry over to a country like Sweden, where labor market programs are targeted at the long-term unemployed at risk of benefit exhaustion. The paper examines transitions out of unemployment using data on unemployed individuals in Sweden. A semi-parametric competing risks model for transitions to employment, labor market programs and non-participation is estimated. There is some evidence that the exit rate from unemployment to employment increases as benefit exhaustion is approached.