Seven Facts about Temporary Layoffs

31 Pages Posted: 10 Jul 2020

See all articles by Arash Nekoei

Arash Nekoei

Harvard University

Andrea Weber

Vienna University of Economics and Business; Austrian Institute of Economic Research (WIFO); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: June 17, 2020

Abstract

We establish seven facts about temporary layoffs (TL), whose employers communicated an anticipated recall date at layoff:

(1) The higher the current TL share at firm/industry-level, the higher (lower) the future recall (layoff) likelihood for both temporary and permanent layoffs (employees);

(2) TL is more prevalent in: the upper-middle part of the wage distribution,

(3-4) in mass layoffs and recessions;

(5) The later the communicated recall date, the lower the accepted new-job wage, unconditional and conditional on non-employment duration;

(6) TLs' new-job hazard rate (wage) jumps (drops) when recall likelihood falls;

(7) Extending unemployment benefits increases separations in recall-intense sectors.

Keywords: temporary layoff, recall, unemployment

JEL Classification: J31, J33, J63, J68

Suggested Citation

Nekoei, Arash and Weber, Andrea Michaela, Seven Facts about Temporary Layoffs (June 17, 2020). Available at SSRN: https://ssrn.com/abstract=3617226 or http://dx.doi.org/10.2139/ssrn.3617226

Arash Nekoei (Contact Author)

Harvard University ( email )

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Andrea Michaela Weber

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

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