- Title
- Unemployment Insurance as a Subsidy to Risky Firms
- Author(s)
- Bernardus Van Doornik Bernardus Van Doornik (Banco Central do Brasil)
- Dimas Fazio Dimas Fazio (National University of Singapore)
- David Schoenherr David Schoenherr (Princeton University)
- Janis Skrastins Janis Skrastins (Washington University in St. Louis)
- Abstract
- We document that a more generous unemployment insurance (UI) system shifts labor supply from safer to riskier firms and reduces compensating wage differentials risky firms need to pay. Consequently, a more generous UI system increases risky firms’ value and fosters entrepreneurship by reducing new firms’ labor costs. Exploiting a UI reform in Brazil that affects only part of the workforce allows us to compare labor supply for workers with different degrees of UI protection within the same firm, sharpening identification of the results. Altogether, our results suggest that UI provides a transfer system from safe to risky firms.
- Creation Date
- 2022-01
- Section URL ID
- Paper Number
- 2022-1
- URL
- https://drive.google.com/file/d/1T_WBur_DP5TYLCLa-Uv-mVcPhNC2CSNH/view
- File Function
- Jel
- J21, J22, J46, J65, K31
- Keyword(s)
- unemployment insurance, labor supply, firm risk, entrepreneurship
- Suppress
- false
- Series
- 13