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Getting a lot out of a little bit of work? The effects of marginal employment during unemployment

Rainer Eppel () and Helmut Mahringer
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Rainer Eppel: Austrian Institute of Economic Research (WIFO)
Helmut Mahringer: Austrian Institute of Economic Research (WIFO)

Empirica, 2019, vol. 46, issue 2, 381-408

Abstract: Abstract Unemployed workers in Austria are allowed to top up unemployment benefits with a certain amount of earnings from employment without any benefit reduction. We do not find evidence that entering such “marginal employment” during unemployment acts as a stepping stone to regular employment. On the contrary, it tends to prolong the unemployment spell and hence reduces the time spent in regular employment within a 3-year period. Moreover, marginal employment during the unemployment spell leads to lower earnings. It inhibits the return to regular employment probably due to a high implicit tax rate on additional income.

Keywords: Marginal employment; Unemployment; Unemployment insurance; Labour market policy evaluation (search for similar items in EconPapers)
JEL-codes: J22 J65 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s10663-018-9402-1

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