Arbeitspapier
Outside Options and Worker Motivation
We study the relationship between outside options and workers' motivation to exert effort. We evaluate changes in outside options arising from age and experience cutoffs in the Austrian unemployment insurance (UI) system, and use absenteeism as a proxy for worker effort. Results indicate that a one-percent increase in the potential UI benefit duration increases absenteeism at the intensive margin by 0.28 percent. These results are consistent with a relational contracting model where effort is constrained by the future value of an employment relationship. This model further predicts that effort reductions are more pronounced if benefits assume a larger role in a worker's outside option and if the perceived relationship value is small. Indeed, we find that our effects are stronger for workers with higher potential cost of unemployment, for older workers, in declining rather than in growing firms, in low-wage firms, and for women as well as workers with children.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 10581
- Classification
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Wirtschaft
Firm Behavior: Theory
Firm Behavior: Empirical Analysis
Time Allocation and Labor Supply
Labor-Management Relations; Industrial Jurisprudence
Personnel Economics: Compensation and Compensation Methods and Their Effects
- Subject
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outside options
effort incentives
relational contracts
- Event
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Geistige Schöpfung
- (who)
-
Ahammer, Alexander
Fahn, Matthias
Stiftinger, Flora
- Event
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Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
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2023
- Handle
- Last update
- 10.03.2025, 10:44 AM UTC
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ahammer, Alexander
- Fahn, Matthias
- Stiftinger, Flora
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2023
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