Publications

19 Mar 19

Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs?

Authors: ALBANESE Andrea, GHIRELLI Corinna, PICCHIO Matteo.

Abstract: We study how unemployment benefit eligibility affects the layoff exit rate by exploiting quasi-experimental variation in eligibility rules in Italy. By using a difference-in-differences estimator, we find an instantaneous increase of about 12% in the layoff probability when unemployment benefit eligibility is attained, which persists for about 16 weeks. These findings are robust to different identifying assumptions and are mostly driven by jobs started after the onset of the Great Recession, in the South and for small firms. We argue that the moral hazard from the employer's side is the main force driving these layoffs.

Reference: ALBANESE Andrea, GHIRELLI Corinna, PICCHIO Matteo. Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs? LISER, 2019, Working Papers n°2019-04, 52 p.

Keywords:
Unemployment insurance,
layoffs,
employer-employee moral hazard,
difference-in-differences,
heterogeneous effects

JEL: C31, C41, J21, J63, J65.

Project: Evaluating Active and Passive Labour Market Policies in Europe

Linked publications
ALBANESE Andrea, CAPPELLARI Lorenzo, LEONARDI Marco.
Oxford Economic Papers, 2019, n°gpz053, pp. 1-24.
ALBANESE Andrea, COCKX Bart, THUY Yannick.
Empirical Economics, 2019.