Safety net or helping hand? : the effect of job search assistance and compensation on displaced workers / Daniel Fackler, Jens Stegmaier, Richard Upward ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association
VerfasserFackler, Daniel ; Stegmaier, Jens ; Upward, Richard
KörperschaftLeibniz-Institut für Wirtschaftsforschung Halle
ErschienenHalle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, September 2023
Umfang1 Online-Ressource (III, 37 Seiten, 0,81 MB) : Diagramme
Literaturverzeichnis: Seite 31-34
SerieIWH-Diskussionspapiere ; no. 18 (September 2023)
Schlagwörterearnings / employment / job loss / transfer companies
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Safety net or helping hand? [0.81 mb]
We provide the first systematic evidence on the effectiveness of a contested policy in Germany to help displaced workers. So-called “transfer companies” (Transfergesellschaften) employ displaced workers for a fixed period during which time workers are provided with job-search assistance and are paid a wage which is a substantial fraction of their pre-displacement wage. Using rich and accurate data on workers’ employment patterns before and after displacement we compare the earnings and employment outcomes of displaced workers who entered transfer companies with those that did not. Workers can choose whether or not to accept a position in a transfer company and therefore we use the availability of a transfer company at the establishment level as an IV in a model of one-sided compliance. Using an event study we find that workers who enter a transfer company have significantly worse post-displacement outcomes but we show that this is likely to be the result of negative selection: workers who lack good outside opportunities are more likely to choose to enter the transfer company. In contrast ITT and IV estimates indicate that the use of a transfer company has a positive and significant effect on employment rates five years after job loss but no significant effect on earnings. In addition the transfer company provides significant additional compensation to displaced workers in the first 12 months after job loss.