Empirica

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Getting a lot out of a little bit of work? The effects of marginal employment during unemployment

Original Paper
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Abstract

Unemployed workers in Austria are allowed to top up unemployment benefits with a certain amount of earnings from employment without any benefit reduction. We do not find evidence that entering such “marginal employment” during unemployment acts as a stepping stone to regular employment. On the contrary, it tends to prolong the unemployment spell and hence reduces the time spent in regular employment within a 3-year period. Moreover, marginal employment during the unemployment spell leads to lower earnings. It inhibits the return to regular employment probably due to a high implicit tax rate on additional income.

Keywords

Marginal employment Unemployment Unemployment insurance Labour market policy evaluation 

Zusammenfassung

Arbeitslose haben in Österreich die Möglichkeit, ihre Arbeitslosengeldleistungen ohne Anspruchsminderung bis zu einer bestimmten Geringfügigkeitsgrenze mit einem Erwerbseinkommen aufzustocken. Wir finden keine Evidenz dafür, dass die Aufnahme einer solchen geringfügigen Beschäftigung während der Arbeitslosigkeit als Brücke in eine reguläre Beschäftigung fungiert. Sie verlängert im Gegenteil die Arbeitslosigkeit und reduziert infolgedessen die in einem Dreijahreszeitraum in regulärer Beschäftigung verbrachte Zeit. Darüber hinaus zieht sie niedrigere Erwerbseinkünfte nach sich. Offensichtlich hemmt die geringfügige Beschäftigung die Rückkkehr in reguläre Beschäftigung aufgrund einer hohen impliziten Besteuerung zusätzlicher Einkommen.

JEL Classification

J22 J65 

Notes

Acknowledgements

We are grateful to Georg Böhs and Christoph Lorenz for very valuable research assistance.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Austrian Institute of Economic Research (WIFO)ViennaAustria
  2. 2.Kiel Institute for the World Economy (IfW)KielGermany

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