In this paper, we study the selection patterns of individuals who manage to have their lay-off delayed around an age at lay-off threshold entitling them to four additional months of unemployment insurance, that is, manipulators. Using administrative data from Italy and bunching techniques, we document substantial manipulation around the cut-off and show that manipulators are selected on their long-term non-employment risk, but not on their moral hazard cost. Finally, we develop a sufficient statistics framework to assess how these findings affect optimal unemployment insurance duration in the presence of manipulation.

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1 October 2025

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The Economic Journal 2025

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DOI: 10.1093/ej/ueaf105

https://academic.oup.com/ej/advance-article/doi/10.1093/ej/ueaf105/8301234

This Journal article is published under the centre's Labour programme.