Samuel G. Young
Department of Economics
Massachusetts Institute of Technology
77 Massachusetts Avenue
Cambridge, MA 02139
Institutional Affiliation: Massachusetts Institute of Technology
NBER Working Papers and Publications
|November 2018||Wages and the Value of Nonemployment|
with , , : w25230
Nonemployment is often posited as a worker’s outside option in wage setting models such as bargaining and wage posting. The value of nonemployment is therefore a key determinant of wages. We measure the wage effect of changes in the value of nonemployment among initially employed workers. Our quasi-experimental variation in the value of nonemployment arises from four large reforms of unemployment insurance (UI) benefit levels in Austria. We document that wages are insensitive to UI benefit changes: point estimates imply a wage response of less than $0.01 per $1.00 UI benefit increase, and we can reject sensitivities larger than $0.03. The insensitivity holds even among workers with low wages and high predicted unemployment duration, and among job switchers and recently unemployed workers. ...
Published: Simon Jäger & Benjamin Schoefer & Samuel Young & Josef Zweimüller, 2020. "Wages and the Value of Nonemployment*," The Quarterly Journal of Economics, vol 135(4), pages 1905-1963.