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Marginal Employment, Unemployment Duration and Job Match Quality

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Author Info

  • Caliendo, Marco

    ()
    (University of Potsdam)

  • Künn, Steffen

    ()
    (IZA)

  • Uhlendorff, Arne

    ()
    (University of Mannheim)

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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6499.

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Length: 32 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6499

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Related research

Keywords: timing of events model; employment stability; job search; unemployment duration; marginal employment;

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References

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  1. Gerard J. van den Berg & Anders Holm & Jan C. van Ours, 2002. "Do stepping-stone jobs exist? Early career paths in the medical profession," Journal of Population Economics, Springer, vol. 15(4), pages 647-665.
  2. Belzil, Christian, 2000. "Unemployment Insurance and Subsequent Job Duration: Job Matching vs Unobserved Heterogeneity," IZA Discussion Papers 116, Institute for the Study of Labor (IZA).
  3. Marco Caliendo & Konstantinos Tatsiramos & Arne Uhlendorff, 2009. "Benefit Duration, Unemployment Duration and Job Match Quality: A Regression-Discontinuity Approach," Discussion Papers of DIW Berlin 967, DIW Berlin, German Institute for Economic Research.
  4. David Card & Raj Chetty & Andrea Weber, 2007. "Cash-On-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 122(4), pages 1511-1560, November.
  5. Arni, Patrick & Lalive, Rafael & van Ours, Jan C., 2009. "How effective are unemployment benefit sanctions? Looking beyond unemployment exit," Working Paper Series 2009:22, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  6. Eichhorst, Werner & Grienberger-Zingerle, Maria & Konle-Seidl, Regina, 2006. "Activation Policies in Germany: From Status Protection to Basic Income Support," IZA Discussion Papers 2514, Institute for the Study of Labor (IZA).
  7. David Card & Jochen Kluve & Andrea Weber, 2010. "Active Labour Market Policy Evaluations: A Meta-Analysis," Economic Journal, Royal Economic Society, vol. 120(548), pages F452-F477, November.
  8. Kyyrä, Tomi & Parrotta, Pierpaolo & Rosholm, Michael, 2009. "The Effect of Receiving Supplementary UI Benefits on Unemployment Duration," IZA Discussion Papers 3920, Institute for the Study of Labor (IZA).
  9. Gaure, Simen & Roed, Knut & Zhang, Tao, 2007. "Time and causality: A Monte Carlo assessment of the timing-of-events approach," Journal of Econometrics, Elsevier, vol. 141(2), pages 1159-1195, December.
  10. James J. Heckman & Salvador Navarro, 2005. "Dynamic Discrete Choice and Dynamic Treatment Effects," NBER Technical Working Papers 0316, National Bureau of Economic Research, Inc.
  11. Crépon, Bruno & Ferracci, Marc & Jolivet, Grégory & van den Berg, Gerard J., 2010. "Analyzing the Anticipation of Treatments Using Data on Notification Dates," IZA Discussion Papers 5265, Institute for the Study of Labor (IZA).
  12. Bruno Crepon & Marc Ferracci & Grégory Jolivet & Gerard Van Den Berg, 2010. "Analyzing the Anticipation of Treatments with Data on Notification Dates," Working Papers 2010-41, Centre de Recherche en Economie et Statistique.
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Cited by:
  1. Berthold, Norbert & Coban, Mustafa, 2013. "Kombilohn oder Workfare? Wege aus der strukturellen Arbeitslosigkeit auf dem Prüfstand," Wirtschaftswissenschaftliche Beiträge 122, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.
  2. Berthold, Norbert & Coban, Mustafa, 2013. "Mini- und Midijobs in Deutschland: Lohnsubventionierung ohne Beschäftigungseffekte?," Wirtschaftswissenschaftliche Beiträge 119, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.

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