Working Paper: NBER ID: w25492
Authors: Simon Jäger; Benjamin Schoefer; Josef Zweimüller
Abstract: We present a test of Coasean theories of efficient separations. We study a cohort of jobs from the introduction through the repeal of a large, age- and region-specific unemployment benefit extension in Austria. In the treatment group, 18% fewer jobs survive. According to the Coasean view, the destroyed marginal jobs had low joint surplus. Hence, after the repeal, the treatment survivors should be dramatically more resilient than the ineligible control group survivors. Strikingly, the two groups instead exhibit identical post-repeal separation behavior. We provide and empirically support an alternative model in which wage rigidity drives the inefficient separation dynamics.\n
Keywords: unemployment insurance; job separations; labor market; wage rigidity; coasean theory
JEL Codes: E24; H0; H3; J01; J18; J23; J31; J63; J64; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| UI extension (Y20) | increase in separations (J63) |
| increase in separations (J63) | lack of resilience post-repeal (H84) |
| UI extension (Y20) | lack of resilience post-repeal (H84) |
| lack of resilience post-repeal (H84) | depletion of marginal low-surplus jobs (J68) |
| wage rigidity (J31) | inefficient separation dynamics (C69) |