Temporary Layoffs and Long-run Labour Market Scarring: Evidence from Austria

Rainer Eppel, Thomas Horvath, Helmut Mahringer and Christine Zulehner
Additional contact information
Rainer Eppel: WIFO
Helmut Mahringer: WIFO

No 734, WIFO Working Papers from WIFO

Abstract: Temporary layoffs – employment separations followed by recall to the same employer – are widely used to buffer short-term demand fluctuations, yet their long-term worker consequences remain poorly understood. Using Austrian administrative data and propensity-score matching, we estimate their long-run effects by comparing workers experiencing short, non-seasonal interruptions during their first employment year with similar workers whose employment continues uninterrupted over the same first-year period. Outcomes are measured from the second year onward. Over ten years, affected workers accumulate about 3.5 months less employment and three months more unemployment, while cumulative earnings decline by more than 6,000 €. Monthly earnings during employment are also slightly lower, providing no evidence of compensating wage differentials. The results indicate substantial worker welfare costs and fiscal externalities and suggest that current institutional arrangements may encourage firms to shift adjustment costs to workers and the unemployment insurance system.

Pages: 21 pages
Date: 2026-09-21
New Economics Papers: this item is included in nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.wifo.ac.at/?p=452427 abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wfo:wpaper:y:2026:i:734

Access Statistics for this paper

More papers in WIFO Working Papers from WIFO Contact information at EDIRC.
Bibliographic data for series maintained by Florian Mayr ().