Recent theoretical work shows that precautionary savings increase in response to an increase in first-order risk. In addition, it is known that the welfare state, being an insurance or consumption-smoothing mechanism, reduces the negative welfare effect of future income uncertainty. We build a...

The most common forms of government-mandated job displacement insurance are Severance Pay (SP; lump-sum payments at layoff) and Unemployment Insurance (UI; periodic payments contingent on non-employment). While there is a vast literature on UI, SP programs have received much less attention, even...

We study asset-tested unemployment insurance in an incomplete markets model with moral hazard during job search. Asset testing has two counteracting effects on welfare. On the one hand, it improves consumption insurance by introducing state contingent transfers to agents most in need. On the...

The most common forms of government-mandated job displacement insurance are Severance Pay (SP; lump-sum payments at layoff) and Unemployment Insurance (UI; periodic payments contingent on non-employment). While there is a vast literature on UI, SP programs have received much less attention, even...

Long-term unemployment reached unprecedented levels in Spain in the wake of the Great Recession and it still affects around 57% of the unemployed. We document the sources that contributed to the rise in long-term unemployment and analyze its persistence using state-of-the-art duration models. We...

Involuntary job loss in administrative data is commonly identified by focusing on mass-layoffs or plant closures. However, such events usually do not happen without prior knowledge, which potentially leads to selection in the labor turnover of distressed firms. We find that workers separating...

This paper shows that the effects of employment protection critically depend on its enforcement. For this purpose, we capture evasion of employment protection via market exit in a setting of monopolistic competition. We find that the number of firms entering the market depends on firing costs...

Reforms of employment protection (EPL) in Europe eased the recourse to temporary forms of employment while not reducing the strictness of EPL of permanent jobs (with the exception of Spain). Since 1990, such two-tier reforms have been implemented in Belgium, Denmark, Germany, Greece, Italy, the...

Since the middle of the 1980s many European countries have reduced the strictness of their employment protection mainly by relaxing it for temporary jobs. These countries are Belgium, Denmark, Germany, Greece, Italy, the Netherlands, Portugal, Spain and Sweden. The article explores the...

This paper examines how and why returning to education fosters recovery from negative employment shocks among high school dropouts. High school dropout remains a problem, particularly as employment is increasingly skilled over time. Exploiting a policy expanding a Norwegian vocational...