Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/295767 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 16744
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We study changes in job security after displacement and exploit eligibility rules for lump-sum payments in the Netherlands to investigate the role of liquid wealth. Within five years of job loss, the likelihood of being in permanent employment remains 12% lower for displaced workers. Those eligible to a lump-sum transfer experience a significantly smaller negative shock to job security. This effect is driven by workers with low liquid wealth, pointing to liquidity constraints as an important mechanism linking unemployment and job security. Finally, we estimate that losses in job security can explain a fifth of the wage cost associated with job displacement.
Subjects: 
job loss
liquid and illiquid wealth
job security
severance pay
The Netherlands
JEL: 
D31
E24
J31
J63
J64
J65
Document Type: 
Working Paper

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