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Getting a lot out of a little bit of work? The effects of marginal employment during unemployment

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  • Rainer Eppel

    () (Austrian Institute of Economic Research (WIFO)
    Kiel Institute for the World Economy (IfW))

  • Helmut Mahringer

    (Austrian Institute of Economic Research (WIFO))

Abstract

Unemployed workers in Austria are allowed to top up unemployment benefits with a certain amount of earnings from employment without any benefit reduction. We do not find evidence that entering such “marginal employment” during unemployment acts as a stepping stone to regular employment. On the contrary, it tends to prolong the unemployment spell and hence reduces the time spent in regular employment within a 3-year period. Moreover, marginal employment during the unemployment spell leads to lower earnings. It inhibits the return to regular employment probably due to a high implicit tax rate on additional income.

Suggested Citation

  • Rainer Eppel & Helmut Mahringer, 2019. "Getting a lot out of a little bit of work? The effects of marginal employment during unemployment," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(2), pages 381-408, May.
  • Handle: RePEc:kap:empiri:v:46:y:2019:i:2:d:10.1007_s10663-018-9402-1
    DOI: 10.1007/s10663-018-9402-1
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    Keywords

    Marginal employment; Unemployment; Unemployment insurance; Labour market policy evaluation;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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