Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223939
Authors: 
Keum, Daniel
Meier, Stephan
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13497
Abstract: 
Expanding unemployment insurance (UI) not only reduces the burden for the unemployed but also the moral cost of layoffs to firms and their managers. Using staggered expansions of UI across US states, we show that expanding UI leads to larger layoffs in firms experiencing negative economic shocks. The effects are stronger in weakly governed and financially unconstrained firms, where managers have greater discretion to avoid moral cost. This study presents moral cost as a novel microeconomic channel through which UI affects layoff decisions, which can compromise its effectiveness as a social insurance program and an automatic stabilizer.
Subjects: 
unemployment insurance
layoffs
managers
prosocial behavior
JEL: 
D04
D91
J65
Document Type: 
Working Paper

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