Josef ZWEIMÜLLER (University of Zurich) – “Marginal jobs and job surplus: evidence from unemployment insurance and job separations” joint with Simon JÄGER and Benjamin SCHOEFER
The Malinvaud-Adres Seminars: Every Thursday at 2:00 pm

Abstract: We study the role of marginal jobs in employment adjustment, in three steps. First, we provide evidence on job destruction in response to reductions in job surplus from improved worker outside options. Our design exploits a sharp quasi-experimental increase in unemployment benefits for older workers in Austria improving substantially the outside options of treated workers. The higher outside options imply a reduced job surplus and leads to additional 11ppt of separations in the treatment group. Second, we isolate and characterize the marginal matches driving this separation response, extending complier analysis to difference-in-difference settings. We find that marginal jobs originate from blue-collar occupations in industries with a high incidence of sickness and disability among older workers. Compared to surviving jobs, marginal jobs had lower earnings and lower worker fixed effects and were more prevalent in shrinking industries and firms. Taken together, our findings indicate that increasing workers’ outside options destroys low-surplus jobs. Third, one direct implication is that outside options shift the composition of surviving jobs towards higher-surplus jobs. To test this prediction, we exploit the abolition of the reform to show that the formerly-treated cohorts indeed exhibit lower extensive-margin aggregate elasticities to subsequent labor demand shocks – due to the missing mass of marginal matches the reform had previously destroyed.