Working Paper: CEPR ID: DP10711
Authors: Andrew Ellul; Marco Pagano; Fabiano Schivardi
Abstract: We investigate the determinants of firms? implicit 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 across and within countries to gauge workers? demand for insurance. Using a firm-level panel from 41 countries, we find that family firms feature more stable employment, greater wage flexibility and lower labor cost than non-family ones. Employment stability in family firms is greater, and the wage discount larger, in countries with more generous public unemployment insurance: private and public provision of employment insurance are substitutes.
Keywords: Family Firms; Insurance; Risk-Sharing; Social Security; Unemployment; Wages
JEL Codes: G31; G32; G38; H25; H26; M40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| family firm status (J54) | employment insurance provision (J65) |
| family firm status (J54) | employment stability (J63) |
| negative sales shocks (G41) | employment stability (J63) |
| family firm status (J54) | passthrough of sales shocks to employment (J69) |
| public unemployment insurance (J65) | employment insurance provision (J65) |
| family firm status (J54) | wage insurance (J38) |
| public unemployment insurance (J65) | wage insurance (J38) |
| family firm status (J54) | wage discount (J31) |