Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs?

Andrea Albanese, Matteo Picchio, Corinna Ghirelli

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We study how unemployment benefit eligibility affects the layoff exit rate by exploiting quasi-experimental variation in eligibility rules in Italy. By using a difference-in-differences estimator, we find an instantaneous increase of about 12% in the layoff probability when unemployment benefit eligibility is attained, which persists for at least 16 weeks. These findings are robust to different identifying assumptions and are mostly driven by jobs started after the onset of the Great Recession and in the South.
Original languageEnglish
Article number101846
JournalLabour Economics
Early online date21 May 2020
Publication statusPublished - 1 Aug 2020


  • Unemployment insurance
  • Layoffs
  • Employer–employee moral hazard
  • Difference-in-differences
  • Heterogeneous effects

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