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Employment and Wage Insurance within Firms: Worldwide Evidence

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  • Ellul, Andrew
  • Pagano, Marco
  • Schivardi, Fabiano

Abstract

We investigate the determinants of firms’ implicit employment and wage insurance to employees, using a difference-in-difference approach: we rely on differences between family and non-family firms to identify the supply of insurance, and exploit variation in unemployment insurance programs across and within countries to gauge workers’ demand for insurance. Using a firm-level panel from 41 countries, we find that family firms provide more stable employment than non-family ones, and in exchange they obtain both greater wage flexibility and lower labor cost: on average, their real wages are 5 percent lower, controlling for country, industry and time effects. The additional employment security provided by family firms is greater, and the wage discount larger, the less generous is public unemployment insurance: private and public provision of employment insurance appear to be substitutes.

Suggested Citation

  • Ellul, Andrew & Pagano, Marco & Schivardi, Fabiano, 2015. "Employment and Wage Insurance within Firms: Worldwide Evidence," CEPR Discussion Papers 10711, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10711
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    Cited by:

    1. repec:iza:izawol:journl:y:2018:n:434 is not listed on IDEAS
    2. Giacinta Cestone & Chiara Fumagalli & Francis Kramaz & Giovanni Pica, 2015. "Insurance Between Firms: The Role of Internal Labor Markets," CSEF Working Papers 386, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 15 Feb 2017.
    3. Bach, Laurent & Serrano-Velarde, Nicolas, 2015. "CEO identity and labor contracts: Evidence from CEO transitions," Journal of Corporate Finance, Elsevier, vol. 33(C), pages 227-242.
    4. repec:eee:jfinec:v:125:y:2017:i:2:p:369-388 is not listed on IDEAS
    5. repec:ucp:jlabec:doi:10.1086/694167 is not listed on IDEAS
    6. Chinhui Juhn & Kristin McCue & Holly Monti & Brooks Pierce, 2018. "Firm Performance and the Volatility of Worker Earnings," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 99-131.
    7. repec:eee:jfinec:v:127:y:2018:i:2:p:303-324 is not listed on IDEAS
    8. repec:eee:corfin:v:46:y:2017:i:c:p:461-476 is not listed on IDEAS

    More about this item

    Keywords

    family firms; insurance; risk-sharing; social security; unemployment; wages;

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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