Marginal Employment, Unemployment Duration and Employment Stability: Evidence from a Multivariate Duration Model

Marginal Employment, Unemployment Duration and Employment Stability: Evidence from a Multivariate Duration Model

Authors Caliendo, M., Künn, S. and Uhlendorff, A.

Year 2009

Reference Working Paper, Bonn.

Keywords Marginal Employment, Unemployment Duration, Job Search, Employment Stability, Multivariate Duration Models

JEL-Classification J64, C41, C33

Presentations 2009 ESEM in Barcelona

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Abstract In this paper we analyze the influence of entering "marginal employment" on subsequent employment prospects of unemployed individuals. Marginal employment is defined as employment below an income threshold with reduced social security contributions. We use a large inflow sample of unemployed men in West Germany and estimate the transitions between unemployment, marginal employment and regular employment simultaneously applying a multivariate duration model. Our results suggest that marginal employment on average increases the initial unemployment duration, i.e., marginal employment is not a stepping stone for unemployed individuals for entering regular employment. However, in the longer run, the employment probability is similar to individuals who did not enter marginal employment. In addition to that we find evidence that the impact differs with respect to the point in time individuals enter the "marginal employment" during their unemployment spell.