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Reintegrating Older Long-Term Unemployed Workers: The Impact of Temporary Job Guarantees

Author

Listed:
  • Ahammer, Alexander

    (Department of Economics, Johannes Kepler University Linz, Austria; and Institute for the Study of Labor (IZA))

  • Halla, Martin

    (Department of Economics, Vienna University of Economics and Business, Austria; Institute for the Study of Labor (IZA); Austrian National Public Health Institute (GOEG); Rockwool Foundation Berlin; and Austrian Institute of Economic Research (WIFO))

  • Heckl, Pia

    (ifo Institute; Ludwig Maximilian University of Munich; and CESifo)

  • Winter-Ebmer, Rudolf

    (Department of Economics, Johannes Kepler University Linz, Austria; Institute for the Study of Labor (IZA); Institute for Advanced Studies (IHS); Rockwool Foundation Berlin, Centre for Economic Policy Research (CEPR))

Abstract

Providing recently laid offworkers with cash benefits may help them overcome mobility costs and thereby stimulate labor mobility. On the other hand, cash benefits may dampen the employment shock and reduce the incentive to move. In this paper, we test these two competing mechanisms against each other. For this we use a severance pay regulation in Austria, which generated a sharp cutoff after which workers became eligible to a severance payment of two monthly salaries. Our results indicate that this cash payment increased labor mobility by around 8% to 12%. This increase is much stronger for worker groups with lower baseline mobility rates.

Suggested Citation

  • Ahammer, Alexander & Halla, Martin & Heckl, Pia & Winter-Ebmer, Rudolf, 2026. "Reintegrating Older Long-Term Unemployed Workers: The Impact of Temporary Job Guarantees," IHS Discussion Papers 3, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsdps:number3
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    File URL: https://irihs.ihs.ac.at/id/eprint/7439/
    File Function: First version, 2026
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    More about this item

    Keywords

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    JEL classification:

    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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