¶ Earnings exemptions for unemployed workers: The relationship between marginal employment, unemployment duration and job quality

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¶ BibTeX

@article{caliendo2016earnings,
  title={Earnings exemptions for unemployed workers: The relationship between marginal employment, unemployment duration and job quality},
  author={Caliendo, Marco and K{\"u}nn, Steffen and Uhlendorff, Arne},
  journal={Labour Economics},
  volume={42},
  pages={177--193},
  year={2016},
  publisher={Elsevier}
}

¶ Abstract

In some countries including Germany unemployed workers can increase their income by working a few hours per week. The intention is to keep unemployed job seekers attached to the labour market and to increase their job-finding probabilities. To analyze the unemployment dynamics of job seekers with and without marginal employment, we consider an inflow sample into unemployment and estimate multivariate duration models. While we do not find any significant impact on the job finding probability in a model with homogeneous effects, models allowing for time-varying coefficients indicate a decreased job finding probability of marginal employment at the beginning of the unemployment spell and an increased job finding probability for the long-term unemployed. Our results suggest that job seekers with marginal employment find more stable post-unemployment jobs, and we find some evidence that the relationship between marginal employment and wages and employment stability varies with respect to skill levels, sector and labor market tightness.

¶ Notes and Excerpts

Unemployed workers in Germany have an additional incentive to make use of this earnings exemption due to “marginal employment” (known as a “mini-job” in Germany). This is defined as employment below a certain income threshold where employees are exempted from social security contributions (SSC) and employers pay an overall reduced rate of SSC.