For a few Euro more: Benefit Generosity and the Optimal Path of Unemployment Benefits

In this paper, we exploit the provision of higher UB at different points of the unemployment spell to shed light on the relative cost of insurance at different horizons after the job loss. First, we exploit a double cap system in an RDD setting to study the effect of higher benefit levels in the early part of unemployment spell on time on benefits and non-employment. We find that higher benefits increase the time spent on benefits and in non-employment, with no impact on new job quality. Second, we exploit an age-based discontinuity in benefit duration, which determines higher benefits later in the spell, to compare the behavioural and mechanical costs of these two variations in benefits. We find that the moral hazard costs are greater for higher benefit levels early in the spell. In addition, we provide evidence of a slight negative selection in long term unemployment and argue that the long-term unemployed face higher uncertainty in their employment prospects. These findings suggest that higher benefits later in the unemployment spell generate lower costs and would provide higher insurance. Our results question the optimality of strongly declining schedules for unemployment benefit levels

A few Euro more: benefit generosity and the optimal path of unemployment benefits

In this paper, we exploit the provision of higher UB at different points of the unemployment spell to shed light on the relative cost of insurance at different horizons after the job loss. First, we exploit a double cap system in an RDD setting to study the effect of higher benefit levels in the early part of unemployment spell on time on benefits and non-employment. We find that higher benefits increase the time spent on benefits and in non-employment, with no impact on new job quality. Second, we exploit an age-based discontinuity in benefit duration, which determines higher benefits later in the spell, to compare the behavioural and mechanical costs of these two variations in benefits. We find that the moral hazard costs are greater for higher benefit levels early in the spell. In addition, we provide evidence of a slight negative selection in long term unemployment and argue that the long-term unemployed face higher uncertainty in their employment prospects. These findings suggest that higher benefits later in the unemployment spell generate lower costs and would provide higher insurance. Our results question the optimality of strongly declining schedules for unemployment benefit levels

Essays in applied econometrics

This thesis consists of three chapters. In the first chapter (The Medium Term Effects of Unemployment Benefits), I explore the effect of longer potential duration of unemployment benefits on workers’ employment over 4 years after layoff. To this purpose, I exploit rich and novel administrative data from Italy. The identification is based on an age at layoff rule which determines 4 additional months of benefits for workers who are fired after turning 50 years of age. I use this in a Regression Discontinuity Design with a donut correction to account for strategic delay of layoff in the neighbourhood of the age threshold. I show that workers with longer potential benefits spend more time on benefits and in nonemployment before finding a new job than workers fired before turning 50 years of age. However, I find that the two groups of workers spend a similar amount of time in nonemployment over 4 years since layoff. This shows that classical estimates of nonemployment effects of unemployment benefits, which do not take into account recurrent nonemployment spells, tend to overestimate these negative effects. In the second chapter (Happy Birthday? Manipulation and Selection in Unemployment Insurance), with Luca Citino (LSE and Bank of Italy) and Kilian Russ (Bonn School of Economics), we study the strategic timing of layoff for workers to gain eligibility to longer benefits. We use rich Italian administrative data and we focus on an age at layoff rule which determined an increase in unemployment benefit potential duration for workers fired after turning 50 years of age. We find that, in a neighbourhood of the threshold, a relevant share of individuals delays the date of layoff in order to be eligible to longer benefits. These workers are more likely to be women, white collar, part time and to be employed in small firms with respect to workers who do not engage in manipulation. Most importantly, these workers show a higher baseline risk of long-term unemployment. Although manipulation leads to a large increase in benefits, the mechanical component plays a central role and behavioural responses are limited. In third chapter (Teacher Turnover? Does it Matter for Student Achievement), with Shqiponja Telhaj (University of Sussex) and Steve Gibbons (LSE), we study the effect of teacher turnover in UK secondary schools. By using a rich regression model and large administrative data, we find that teacher turnover has a small negative, but highly statistically significant, effect on pupils’ performance. This effect is stronger for pupils at the bottom of grade distribution and from disadvantaged background

Teacher turnover: does it matter for pupil achievement?

Recent research has established that teachers matter for student achievements, albeit because of dimensions of ‘teacher quality’ that are largely unexplained. A less closely investigated issue is whether teacher turnover directly harms student academic achievement. In this paper, we examine whether teacher turnover affects academic achievement of 16 year old state secondary school students using a unique data set of linked students and teachers in England. Identification comes from either: a school fixed effects design which exploits year-on-year variation in turnover in different subject groups, within schools; or student fixed effect design that where the variation comes from the cross sectional variation in turnover in different subjects, in the same school, experienced by a student. Both methods give similar results, suggesting that a higher teacher entry rate reduces students’ test scores, albeit by small amounts

Colocation and knowledge diffusion: evidence from million dollar plants

This paper uses the entry of large corporations into U.S. counties during the 1980s and 1990s to analyse the effect of plant opening on knowledge spillovers to local inventors. We use a difference-in-differences identification strategy exploiting information on the revealed ranking of possible locations for large plants in the US. Under the identifying assumption that locations not chosen (losers) are a counterfactual for the chosen location (winner), we find that patents of these large corporations are 68% more likely to be cited in the winning counties relative to the losing counties after entry. The effect materializes after the opening of the plant, rather than after the entry decision itself. The increase in citations is stronger for more recent patents whereas patent quality does not seem to play an important role. We find that the increase in citations is larger from patents belonging to the same technology class of the cited patent

Partial lockdown and the spread of Covid-19: lessons from the Italian case

This paper investigates the effect of exemption of essential sectors from the lockdown enacted in Italy in Spring 2020 on COVID-19 infections and mortality. We exploit the distribution of the density of essential workers across provinces and rich administrative data in a difference in difference framework. We find that a standard deviation increase in essential workers per square kilometre leads to about 1.1 additional daily registered cases per 100,000 inhabitants. In addition, we show that a similar change in density leads to 0.32 additional daily deaths per 100,000 inhabitants. Back of envelope computations suggest that about one third of the Covid-19 cases in the period considered could be attributed to the less stringent lockdown for essential sectors as well as about 13,000 additional deaths, with an additional 107 million Euros in direct expenditure for the National Health System. In addition, we find that these effects are heterogeneous across sectors, with Services having a much larger impact than Manufacturing, and across geographic areas, with smaller benefits in areas less affected by the pandemic. These results are stable across a wide range of specifications and robustness check

Managerial input and firm performance. Evidence from a policy experiment

We study the effects of a subsidy program designed to boost small and medium enterprises' export capabilities through a Temporary Export Manager (TEM), hired for at least 6 months to provide consulting on how to reach foreign markets. Firms applied online for the subsidy and vouchers to hire TEMs were allocated on a first-come, first-served basis. We use a difference-in-differences design to compare the performances of firms that nearly got the subsidy with those that barely did not. Eligible firms experienced a large increase in revenues, return on equity, profits and value added per employee, accompanied by a significant growth in export in extra-EU markets four years after receiving the subsidy. The gains were larger for the least productive and smaller firms and effects were heterogeneous across TEM providers. TEMs were also effective in stimulating 'good' labor demand: besides intensifying exports, firms increased their workforce by nearly 13%, mainly in full-time and permanent employees. Results of a survey conducted on TEM providers confirm our econometric results and revealed that the benefits of voucher extended beyond the initial subsidized service

Friday morning fever. Evidence from a randomized experiment on sick leave monitoring in the public sector

Absent providers of key public services, such as schooling and health, are a major problem in both developed and developing countries. This paper provides the first analysis of a population-wide controlled field experiment for home visits checking on sick leave in the public sector. The experiment was carried out in Italy, a country with large absenteeism in the public sector, and it concerned the universe of public employees. We exploit unique administrative data from the Italian social security administration (INPS) on sick leave and work histories. We find that receiving a home visit reduces the number of days on sick leave in the following 16 months by about 12% (5.5 days). The effect is stronger for workers who are found irregularly on sick leave (-10.2 days). We interpret our findings as a deterrence effect of home visits: workers being found irregularly on sick leave experience a decline of about 2% of their wage in the following 12 months. Uncertainty aversion (there is no automatism in these sanctions) can play a role in these results. Our estimates suggest that home visits are cost-effective: every Euro spent for the visits involves up to 10 Euros reductions in sick benefits outlays. We estimate the marginal value of public funds (MVPF) spent on home visits at about 1.13, which is significantly lower than estimates of MVPF of income taxes in the US