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Unemployment Benefits and the Timing of Redundancies

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  • Laura Khoury

    (Norwegian School of Economics and Business Administration - Norwegian School of Economics and Business Administration)

Abstract

The literature on unemployment insurance (UI) has primarily focused on its im-pact on unemployment outflows. Using administrative data and a discontinuity inUI benefits at a tenure threshold, I show that inflows also respond to the extentof UI. Based on bunching estimates, the elasticity of the employment duration toUI benefits is estimated to be 0.014, implying that 10% of layoffs in an 8-weekwindow before the threshold are delayed. Examining the mechanisms, the evidencesuggests that employers and employees bargain over contract termination. Takentogether, employers and employees show sophisticated reactions to UI with effectson employment duration.

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  • Laura Khoury, 2021. "Unemployment Benefits and the Timing of Redundancies," Working Papers halshs-02057145, HAL.
    • Handle: RePEc:hal:wpaper:halshs-02057145
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02057145v2
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    2. Albanese, Andrea & Picchio, Matteo & Ghirelli, Corinna, 2020. "Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs?," Labour Economics, Elsevier, vol. 65(C).

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    Keywords

    Bunching; Unemployment insurance; Behavioral responses; Bargaining;
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