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Job Security and Liquid Wealth

Author

Listed:
  • Figueiredo, Ana
  • Marie, Olivier
  • Markiewicz, Agnieszka

Abstract

We study changes in job security after displacement and exploit eligibility rules for lump-sum payments in the Netherlands to investigate the role of liquid wealth. Within five years of job loss, the likelihood of being a permanent worker remains 12% lower for displaced workers. Those eligible to a lump-sum transfer experience a significantly smaller negative shock to job security. This effect is driven by workers with low liquid wealth, pointing to liquidity constraints as an important mechanism linking unemployment and job security. Finally, we estimate that losses in job security can explain 21% of the wage cost associated with job displacement.

Suggested Citation

  • Figueiredo, Ana & Marie, Olivier & Markiewicz, Agnieszka, 2023. "Job Security and Liquid Wealth," CEPR Discussion Papers 18577, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18577
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    More about this item

    Keywords

    Job loss; Liquid and illiquid wealth; Job security; Severance pay; The netherlands;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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