Marginal Employment, Unemployment Duration and Job Match Quality

Caliendo, Marco ; Künn, Steffen ; Uhlendorff, Arne

Document Type: Working paper
Year of publication: 2012
The title of a journal, publication series: IZA Discussion Paper Series
Volume: 6499
Place of publication: Bonn
Publication language: English
Institution: School of Law and Economics > Alexander v. Humboldt Professor in Econometrics and Empirical Economics (Van den Berg -2016)
Subject: 330 Economics
Abstract: In some countries including Germany unemployed workers can increase their income during job search by taking up “marginal employment” up to a threshold without any deduction from their benefits. Marginal employment can be considered as a wage subsidy as it lowers labour costs for firms owing to reduced social security contributions, and increases work incentives due to higher net earnings. Additional earnings during unemployment might lead to higher reservation wages prolonging the duration of unemployment, yet also giving unemployed individuals more time to search for better and more stable jobs. Furthermore, marginal employment might lower human capital deterioration and raise the job arrival rate due to network effects. To evaluate the impact of marginal employment on unemployment duration and subsequent job quality, we consider a sample of fresh entries into unemployment. Our results suggest that marginal employment leads to more stable post-unemployment jobs, has no impact on wages, and increases the job-finding probability if it is related to previous sectoral experience of the unemployed worker. We find evidence for time-varying treatment effects: whilst there is no significant impact during the first twelve months of unemployment, job finding probabilities increase after one year and the impact on job stability is stronger if the jobs are taken up later within the unemployment spell.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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Caliendo, Marco ; Künn, Steffen ; Uhlendorff, Arne (2012) Marginal Employment, Unemployment Duration and Job Match Quality. IZA Discussion Paper Series Bonn 6499 [Working paper]

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