Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/62085
Authors: 
Basten, Christoph
Fagereng, Andreas
Telle, Kjetil
Year of Publication: 
2012
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2012: Neue Wege und Herausforderungen für den Arbeitsmarkt des 21. Jahrhunderts - Session: Transition out of Unemployment B18-V1
Abstract: 
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 favors an interpretation as liquidity constraints over the alternative of mental accounting. Finding liquidity constraints in Norway, despite its equitable wealth distribution and generous welfare state, means they are likely to exist also in other countries.
JEL: 
C41
E24
J65
Document Type: 
Conference Paper

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