Employment and Wage Insurance within Firms: Worldwide Evidence
CFS Working Paper No. 517
67 Pages Posted: 22 Sep 2015 Last revised: 17 Sep 2017
Date Written: September 16, 2017
Using a firm-level international panel dataset, we study if unemployment insurance offered by the government and by firms are substitutes. We exploit cross-country and time-series variation in public unemployment insurance as a shifter of workers’ demand for insurance within firms, and family vs. non-family ownership as a shifter of firms’ supply of insurance. Our evidence supports the substitutability hypothesis: employment stability in family firms is greater, and the wage discount larger, in countries and periods with less generous public unemployment insurance, while no such substitutability emerges for non-family firms.
Keywords: risk-sharing, insurance, social security, unemployment, wages, family firms
JEL Classification: G32, G38, H53, J65
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