Safety in unemployment and risky experimentation of young firms
The DEMS Economics Seminar series is proud to host
Javier Miranda
(Halle Institute for Economic Research and Friedrich Schiller University Jena)
joint work with Renato Faccini and Seho Kim
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.
The seminar will be in presence, Room 4096 - Building U6