Employment and wage insurance within firms: worldwide evidence

Andrew Ellul, Marco Pagano and Fabiano Schivardi

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We investigate the determinants of firms' implicit employment and wage insurance to employees against industry-level and idiosyncratic shocks. We rely on differences between family and non-family firms to identify the supply of insurance, and between national public insurance programs to gauge workers' demand for insurance. Using firm-level data from 41 countries, we find that family firms provide greater employment protection but less wage stability. Employment protection comes at a price: family firms pay 5 percent lower wages, controlling for country, industry and time effects. The additional protection afforded by family firms is greater, and the wage discount larger, the less generous the public unemployment insurance program, indicating that firm and government employment insurance are substitutes. The cross-country evidence is broadly confirmed by Italian employee-employer matched data, which also show that in family firms the adjustment to shocks occurs mostly through the hiring margin, while separations are not responsive to shocks.

Keywords: risk-sharing; insurance; social security; unemployment; wages; family firms (search for similar items in EconPapers)
JEL-codes: G31 G32 G38 H25 H26 M40 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2014-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://eprints.lse.ac.uk/119027/ Open access version. (application/pdf)

Related works:
Journal Article: Employment and Wage Insurance within Firms: Worldwide Evidence (2018)
Working Paper: Employment and Wage Insurance within Firms - Worldwide Evidence (2017)
Working Paper: Employment and Wage Insurance within Firms: Worldwide Evidence (2017)
Working Paper: Employment and Wage Insurance within Firms: Worldwide Evidence (2015)
Working Paper: Employment and Wage Insurance within Firms: Worldwide Evidence (2015)
Working Paper: Employment and wage insurance within firms: Worldwide evidence (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:119027

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