Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/183611
Authors: 
Pagano, Marco
Picariello, Luca
Year of Publication: 
2018
Series/Report no.: 
CFS Working Paper Series 603
Abstract: 
In talent-intensive jobs, workers' quality is revealed by their performance. This enhances productivity and earnings, but also increases layoff risk. Firms cannot insure workers against this risk if they compete fiercely for talent. In this case, the more risk-averse workers will choose less quality-revealing jobs. This lowers expected productivity and salaries. Public unemployment insurance corrects this inefficiency, enhancing employment in talent-sensitive industries, consistently with international evidence. Unemployment insurance dominates legal restrictions on firms' dismissals, which penalize more talent-sensitive firms and thus depress expected productivity. Finally, unemployment insurance fosters education, by encouraging investment in risky human capital that enhances talent discovery.
Subjects: 
talent
learning
layoff risk
unemployment insurance
JEL: 
D61
D83
I20
J24
J63
J65
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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