Job Security and Liquid Wealth

Ana Figueiredo (), Olivier Marie and Agnieszka Markiewicz ()
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Ana Figueiredo: Vrije Universiteit Amsterdam
Agnieszka Markiewicz: Erasmus University Rotterdam

No 16744, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study changes in job security after displacement and exploit eligibility rules for lump-sum payments in the Netherlands to investigate the role of liquid wealth. Within five years of job loss, the likelihood of being in permanent employment remains 12% lower for displaced workers. Those eligible to a lump-sum transfer experience a significantly smaller negative shock to job security. This effect is driven by workers with low liquid wealth, pointing to liquidity constraints as an important mechanism linking unemployment and job security. Finally, we estimate that losses in job security can explain a fifth of the wage cost associated with job displacement.

Keywords: job loss; liquid and illiquid wealth; job security; severance pay; The Netherlands (search for similar items in EconPapers)
JEL-codes: D31 E24 J31 J63 J64 J65 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2024-01
New Economics Papers: this item is included in nep-eur and nep-lab
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Working Paper: Job Security and Liquid Wealth (2023)
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