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Marginal Jobs and Job Surplus: A Test of the Efficiency of Separations

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  • Simon Jäger
  • Benjamin Schoefer
  • Josef Zweimüller

Abstract

We present a test of Coasean theories of efficient separations. We study a cohort of jobs from the introduction through the repeal of a large age- and region-specific unemployment benefit extension in Austria. In the treatment group, 18.5 fewer jobs survive the program period. According to the Coasean view, the destroyed marginal jobs had low joint surplus. Hence, after the repeal, the treatment survivors should be more resilient than the ineligible control group survivors. Strikingly, the two groups instead exhibit identical post-repeal separation behaviour. We provide, and find suggestive evidence consistent with, an alternative model in which wage rigidity drives the inefficient separation dynamics.

Suggested Citation

  • Simon Jäger & Benjamin Schoefer & Josef Zweimüller, 2023. "Marginal Jobs and Job Surplus: A Test of the Efficiency of Separations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(3), pages 1265-1303.
    • Handle: RePEc:oup:restud:v:90:y:2023:i:3:p:1265-1303.
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    File URL: http://hdl.handle.net/10.1093/restud/rdac045
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    Cited by:

    1. Martin Kerndler & Michael Reiter, 2020. "Wage Rigidities and Old-Age Unemployment," EconPol Policy Brief 22, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    2. Laura Khoury & Clément Brébion & Simon Briole, 2019. "Entitled to Leave: the Impact of Unemployment Insurance Eligibility on Employment Duration and Job Quality," Working Papers halshs-02393383, HAL.
    3. Simon Jäger & Christopher Roth & Nina Roussille & Benjamin Schoefer, 2024. "Worker Beliefs About Outside Options," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(3), pages 1505-1556.
    4. Andreas Haller & Stefan Staubli & Josef Zweimüller, 2024. "Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits?," Econometrica, Econometric Society, vol. 92(1), pages 79-110, January.
    5. Natalia Bermudez & Muriel Dejemeppe & Giulia Tarullo, 2023. "Theory and Empirics of Short-Time Work: A Review," LIDAM Discussion Papers IRES 2023018, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    6. repec:osf:socarx:42pbz_v1 is not listed on IDEAS
    7. Mosquera, Roberto, 2022. "The long-term effect of resource booms on human capital," Labour Economics, Elsevier, vol. 74(C).
    8. Demirgüç-Kunt, Asli & Lokshin, Michael & Torre, Iván, 2024. "Protect incomes or protect jobs? The role of social policies in post-pandemic recovery," World Development, Elsevier, vol. 182(C).
    9. Christina Brinkmann & Simon Jäger & Moritz Kuhn & Farzad Saidi & Stefanie Wolter, 2024. "Short-Time Work Extensions," NBER Working Papers 33112, National Bureau of Economic Research, Inc.
    10. Alexander Ahammer & Analisa Packham, 2020. "Dying to Work: Effects of Unemployment Insurance on Health," NBER Working Papers 27267, National Bureau of Economic Research, Inc.
    11. Albanese, Andrea & Picchio, Matteo & Ghirelli, Corinna, 2020. "Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs?," Labour Economics, Elsevier, vol. 65(C).
    12. Petri Böckerman & Ohto Kanninen & Ilpo Suoniemi, 2022. "Income-well-being gradient in sickness and health," Working Papers 335, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    13. Maibom, Jonas & Vejlin, Rune Majlund, 2021. "Passthrough of Firm Performance to Income and Employment Stability," IZA Discussion Papers 14131, Institute of Labor Economics (IZA).
    14. Preston Mui & Benjamin Schoefer, 2025. "Reservation Raises: The Aggregate Labour Supply Curve at the Extensive Margin," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 92(1), pages 442-475.
    15. Albright, Alex, 2022. "No Money Bail, No Problems? Trade-offs in a Pretrial Automatic Release Program," SocArXiv 42pbz, Center for Open Science.
    16. Goensch, Johannes & Gulyas, Andreas & Kospentaris, Ioannis, 2024. "Worker mobility and UI extensions," European Economic Review, Elsevier, vol. 162(C).
    17. Giulia Giupponi & Camille Landais & Alice Lapeyre, 2022. "Should We Insure Workers or Jobs during Recessions?," Journal of Economic Perspectives, American Economic Association, vol. 36(2), pages 29-54, Spring.
    18. Khoury, Laura, 2023. "Unemployment benefits and redundancies: Incidence and timing effects," Journal of Public Economics, Elsevier, vol. 226(C).
    19. Jessen, Jonas & Jessen, Robin & Galecka-Burdziak, Ewa & Góra, Marek & Kluve, Jochen, 2023. "The Micro and Macro Effects of Changes in the Potential Benefit Duration," IZA Discussion Papers 15978, Institute of Labor Economics (IZA).
    20. Dengler, Thomas & Gehrke, Britta & Zessner-Spitzenberg, Leopold, 2024. "Short-Time Work and Precautionary Savings," ECON WPS - Working Papers in Economic Theory and Policy 02/2024, TU Wien, Institute of Statistics and Mathematical Methods in Economics, Economics Research Unit.
    21. Amy Finkelstein & Nathaniel Hendren, 2020. "Welfare Analysis Meets Causal Inference," NBER Working Papers 27640, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

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    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

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