This thesis investigates the employment and welfare effects of social insurance programs and minimum wage policy. The first chapter provides new estimates of the income effect of welfare transfers on individual labor supply. Using administrative data on survivor insurance in Italy, and quasi-experimental variation in the benefit amount received by surviving spouses, the analysis shows that benefit losses trigger equivalent increases in earned income, implying an income effect of approximately minus one. Extensive-margin responses – in the form of increased labor-market entry at younger ages and delayed retirement at older ages – emerge as the main driver of the earned income response. A revealed-preference model demonstrates that large participation responses to realized benefit drops are revealing of large implicit valuations of welfare transfers in the widowhood state.
The second chapter analyzes the employment and welfare effects of short-time work programs (STW), which subsidize hour reductions in firms affected by temporary shocks. The analysis uses administrative data from Italy and quasi-experimental variation in STW policy rules to identify the effects of STW on firms and workers, and on reallocation in the labor market. STW has a large and significant negative effect on hours, but large and positive effects on headcount employment. However, these effects disappear once the subsidy ends. Similarly, STW does not provide long-term insurance to workers. Finally, STW has significant negative reallocation effects on employment growth at the local labor market level. A conceptual framework assesses the welfare implications of STW and provides a general formula for the optimal subsidy.
The third chapter investigates the impact of minimum wages on firm behavior and the within-firm wage structure. The analysis exploits the natural experiment of the National Living Wage (NLW) introduction and matched employer-employee data on English care homes. No evidence of adverse employment effects, nor firm closure is found. Rather homes bound more tightly by the NLW exhibit smaller short-run improvements in the quality of care services. There is strong evidence of positive wage spillovers onto younger workers, but with there being no negative employment spillovers. Employers’ preferences for fairness emerge as the most plausible explanation for the observed wage spillovers.
The fourth chapter investigates the nature of alternative work arrangements in the UK labor market, placing a particular focus on zero hours contracts (ZHC). Combining existing secondary data and newly collected survey data, the analysis documents the importance and characteristics of ZHC work. The chapter also explores the extent to which higher minimum wages have potential to induce a larger utilization of alternative work arrangements by firms and, consequently, a shift in the composition of their workforce towards more flexible, but also insecure jobs. Minimum wage increases are shown to have resulted in a greater utilization of ZHCs in the UK social care sector, and in low wage sectors more generally.