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Layoff Tax and the Employment of the Elderly

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  • Mario Schnalzenberger
  • Rudolf Winter-Ebmer

Abstract

In 1996 Austria introduced a tax for the layoff of older workers, which was tightened in 2000. The regulation requires employers to pay a tax of up to 170 percent of the gross monthly income when they give notice to employees aged 50 or more. We use data from Austrian social security records to investigate if such layoff taxes lead to less firing of older workers. We compare a control group of workers aged nearly 50 with the treatment group above 50. We apply a difference-in-difference approach to analyze the difference in the displacement probability of all prime aged workers. Results show substantial reductions in layoff behavior for workers aged 50 and above after the tightening of the tax.

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Bibliographic Info

Paper provided by The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria in its series NRN working papers with number 2008-04.

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Length: 25 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:jku:nrnwps:2008_04

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Postal: NRN Labor Economics and the Welfare State, c/o Rudolf Winter-Ebmer, Altenbergerstr. 69, 4040 Linz
Phone: +43-732-2468-8216
Fax: +43-732-2468-8217
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Web page: http://www.labornrn.at/
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Keywords: Layoff tax; labor demand; employment; elderly workers;

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References

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  1. Daron Acemoglu & Joshua Angrist, 1998. "Consequences of Employment Protection? The Case of the Americans with Disabilities Act," Working papers 98-13, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Ichino, Andrea & Schwerdt, Guido & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2007. "Too Old to Work, Too Young to Retire?," IZA Discussion Papers 3110, Institute for the Study of Labor (IZA).
  3. Adriana Kugler & Juan F. Jimeno & Virginia Hernanz, 2002. "Employment consequences of restrictive permanent contracts: Evidence from Spanish labor market reforms," Economics Working Papers 651, Department of Economics and Business, Universitat Pompeu Fabra.
  4. Kugler, Adriana & Pica, Giovanni, 2008. "Effects of employment protection on worker and job flows: Evidence from the 1990 Italian reform," Labour Economics, Elsevier, vol. 15(1), pages 78-95, February.
  5. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
  6. Adriana Kugler adkugler@uh.edu & Giovanni Pica, 2005. "The Effects of Employment Protection on the Italian Labour Market," CSEF Working Papers 135, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  7. Luc Behaghel & Bruno Crépon & Béatrice Sédillot, 2008. "The perverse effects of partial employment protection reform: the case of French older workers," Working Papers 23397, Institut National de la Recherche Agronomique, France.
  8. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Winter-Ebmer, Rudolf, 1996. "Benefit Duration and Unemployment Entry: Quasi-experimental Evidence for Austria," CEPR Discussion Papers 1521, C.E.P.R. Discussion Papers.
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Cited by:
  1. Picchio, Matteo & van Ours, Jan C., 2011. "Retaining through Training: Even for Older Workers," IZA Discussion Papers 5591, Institute for the Study of Labor (IZA).
  2. Graf, Nikolaus & Hofer, Helmut & Winter-Ebmer, Rudolf, 2011. "Labor supply effects of a subsidized old-age part-time scheme in Austria," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(3), pages 217-229.

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