The Effects of Marginal Employment on Subsequent Labour Market Outcomes


Address for correspondence: Andrea Weber, University of Mannheim, Chair for Applied Political Economy, L7, 3-5, Room 146, 68131 Mannheim, Germany. Tel.: +49 621 181 1928; fax: +49 621 181 1931; e-mail:


Abstract. Unemployed workers in Austria do not lose their unemployment benefits (UI) if they work in a job where their earnings are below a certain threshold [‘marginal employment’ (ME)]. ME might improve their labour market status by signalling effort, or worsen it through reduced job-search effort. Those who work in ME while claiming UI have less employment and lower earnings afterwards than those who do not. The penalty lessens over time but is still present after three years.