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Cash-on-Hand and the Duration of Job Search: Quasi-Experimental Evidence from Norway

Christoph Basten, Andreas Fagereng () and Kjetil Telle

Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century from Verein für Socialpolitik / German Economic Association

Abstract: We identify the causal effect of lump-sum severance payments on non-employment duration in Norway by exploiting a discontinuity in eligibility at age 50. We find that a severance payment worth 1.2 months' earnings at the median lowers the fraction re-employed after a year by six percentage points. Data on household wealth enable us to verify that the effect is decreasing in prior wealth, which favors an interpretation as liquidity constraints over the alternative of mental accounting. Finding liquidity constraints in Norway, despite its equitable wealth distribution and generous welfare state, means they are likely to exist also in other countries.

JEL-codes: C41 E24 J65 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-eur and nep-lab
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Related works:
Journal Article: Cash‐on‐hand and the Duration of Job Search: Quasi‐experimental Evidence from Norway (2014) Downloads
Working Paper: Cash-on-Hand and the Duration of Job Search: Quasi-Experimental Evidence from Norway (2012) Downloads
Working Paper: Cash-on-Hand and the duration of job search. Quasi-experimental evidence from Norway (2012) Downloads
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