Discussion Papers no. 679

Quasi-experimental evidence from Norway

Cash-on-hand and the duration of job search

Publisert:

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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 supports the view that the severance pay effect should be interpreted as evidence of liquidity constraints. Finding liquidity constraints in Norway, despite its equitable wealth distribution and generous welfare state, means they are likely to exist also in other countries.

Om publikasjonen

Tittel

Cash-on-hand and the duration of job search. Quasi-experimental evidence from Norway

Ansvarlige

Christoph Basten, Andreas Fagereng, Kjetil Telle

Serie og -nummer

Discussion Papers no. 679

Utgiver

Statistics Norway

Emne

Discussion Papers

ISSN

1892-753X

Antall sider

37

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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