Targeted wage support for older unemployed workers

Abstract

"Older displaced workers may use their previous wage as a marker of their current productivity, which may result in rather high reservation wages. This paper examines a targeted wage support program in which older unemployed workers who take up a job paying less than their previous job qualify for monetary compensation covering part of the wage loss. We sent out information brochures about the program to 2,600 randomly selected older unemployed men. We use survey and register data to investigate the effect of the information treatment on awareness of the program and on individual labor market outcomes, and we estimate effects of awareness on the take-up and on labor market outcomes, taking into account that the program may have ex ante effects on search behavior. We develop a job search model to derive theoretical implications. As awareness is only observed in the survey, the program effects are estimated using 2-Sample Instrumental Variables (2SIV) combining the survey and register data. The paper thus provides a novel and feasible framework for the use of RCTs with information treatments, combined survey and register data and 2SIV to study dynamic outcomes." (Author's abstract, IAB-Doku) ((en))

Cite article

Berg, G., Homrighausen, P. & Stephan, G. (2017): Targeted wage support for older unemployed workers. An evaluation combining survey and register data from a randomized controlled field experiment. (LASER discussion papers 100), Erlangen, 35 p.