Talent Discovery, Layoff Risk and Unemployment Insurance

Marco Pagano and Luca Picariello

No 11/2017, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: In talent-intensive jobs, workers’ performance reveals their quality. This enhances productivity and wages, but also increases layoff risk. If workers cannot resign from their jobs, firms can insure them via severance pay. If instead workers can resign, private insurance cannot be provided, and more risk-averse workers will choose less informative jobs. This lowers expected Productivity and wages. Public unemployment insurance corrects this inefficiency, enhancing employment in talent-sensitive industries and investment in education by employees. The prediction that the generosity of unemployment insurance is positively correlated with the share of workers in talent-sensitive industries is consistent with international and U.S. evidence.

Keywords: Talent; Learning; layoff risk; unemployment insurance (search for similar items in EconPapers)
JEL-codes: D61 D62 D83 I26 J24 J65 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2017-08-01
New Economics Papers: this item is included in nep-hrm, nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Talent discovery, layoff risk and unemployment insurance (2023)
Working Paper: Talent Discovery, Layoff Risk and Unemployment Insurance (2023)
Working Paper: Talent Discovery, Layoff Risk and Unemployment Insurance (2018)
Working Paper: Talent discovery, layoff risk and unemployment insurance (2018)
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