Safety in unemployment and risky experimentation of young firms / Renato Faccini, Seho Kim, Javier Miranda ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association
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Safety in unemployment and risky experimentation of young firms
Discovery
198614254X
URN
urn:nbn:de:gbv:3:2-123456789-1222294
DOI
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Publication history
Halle (Saale), Germany : Halle Institute for Economic Research (IWH) - Member of the Leibniz Association, 2026
Content
1 Online-Ressource (III, 66 Seiten, 1,19 MB)
Edition
Language
eng
Comment
Literaturverzeichnis: Seite 42-45
Abstract
We develop a theory in which a lower cost of job loss reduces the compensating wage premium workers require to join risky young firms. Lower labor costs encourage high-upside experimentation and raise productivity. Because experimentation is not directly observable, we exploit its life-cycle structure: experimentation risk is concentrated among young firms and resolved as firms mature. Using Danish matched employer-employee data and labor-market variation, we show that higher job-finding rates are associated with a lower young-mature wage differential. A randomized survey experiment supports the mechanism: worsening unemployment prospects increases the premium workers require to accept employment at higher-failure-risk young firms.
Series
IWH discussion papers ; 2026, no. 15 (October 2026) ppn:837399270