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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Job mobility and creative destruction: flexicurity in the land of Schumpeter
Organization Unit
  • Andreas Kettemann
  • Francis Kramarz
  • Josef Zweimüller
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 256
ISSN 1664-7041
Number of Pages 30
Date 2017
Abstract Text This paper evaluates the 2003 Austrian severance-pay reform, often advocated as a role model for structural reforms in countries plagued by inflexible labor markets and high unemployment. The reform replaced a system with tenure-based severance payments after a layoff (but not after a quit) by payments into pension accounts that accrue to workers after a layoff as well as after a quit. We identify the reform effects using a regression discontinuity (RD) design and find a substantial increase in job mobility in response to the reform. A search-and-matching model with on-the- job search and tenure-dependent severance payments is structurally estimated using the RD-induced empirical moments. Counterfactual policy experiments suggest that flexicurity reforms spur job creation and can substantially reduce unemployment in countries where severance payments are initially high.
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Keywords Severance pay, job mobility, flexicurity, Abfindung, Arbeitsplatzwechsel, Arbeitsmarkt, Flexibilisierung, Arbeitslosigkeit
Additional Information Auch erschienen als CEPR Discussion Paper 12112