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Employment and Wage Insurance within Firms: Worldwide Evidence

Author

Listed:
  • Andrew Ellul

    (Indiana University)

  • Marco Pagano

    (University of Naples Federico II)

  • Fabiano Schivardi

    (Bocconi University)

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 nonfamily 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

  • Andrew Ellul & Marco Pagano & Fabiano Schivardi, 2015. "Employment and Wage Insurance within Firms: Worldwide Evidence," Working Papers CELEG 1506, Dipartimento di Economia e Finanza, LUISS Guido Carli.
  • Handle: RePEc:lui:celegw:1506
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Marco Pagano & Luca Picariello, 2017. "Talent Discovery, Layoff Risk and Unemployment Insurance," EIEF Working Papers Series 1710, Einaudi Institute for Economics and Finance (EIEF), revised May 2018.
    2. repec:iza:izawol:journl:y:2018:n:434 is not listed on IDEAS
    3. 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.
    4. 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.
    5. Matthias Efing & Harald Hau & Patrick Kampkktter & Jean-Charles Rochet, 2018. "Bank Bonus Pay as a Risk Sharing Contract," Working Papers hal-01847442, HAL.
    6. Andrew Ellul & Marco Pagano, 2017. "Corporate Leverage and Employees’ Rights in Bankruptcy," CSEF Working Papers 472, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 19 Mar 2019.
    7. Renata Lemos & Daniela Scur, 2018. "All in the Family? CEO Choice and Firm Organization," CEP Discussion Papers dp1528, Centre for Economic Performance, LSE.
    8. repec:eee:jfinec:v:125:y:2017:i:2:p:369-388 is not listed on IDEAS
    9. repec:ucp:jlabec:doi:10.1086/694167 is not listed on IDEAS
    10. 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.
    11. Heywood, John S. & O'Mahony, Mary & Siebert, W. Stanley & Rincon-Aznar, Ana, 2018. "The Impact of Employment Protection on the Industrial Wage Structure," IZA Discussion Papers 11788, Institute of Labor Economics (IZA).
    12. repec:eee:jfinec:v:127:y:2018:i:2:p:303-324 is not listed on IDEAS
    13. repec:eee:corfin:v:46:y:2017:i:c:p:461-476 is not listed on IDEAS

    More about this item

    Keywords

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

    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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