Timed to Say Goodbye: Does Unemployment Benefit Eligibility Affect Worker Layoffs?

•The paper estimates the effect of unemployment benefits on layoffs in Italy•We draw an inflow sample of about 425,000 new jobs started between 2005 and 2011•We exploit quasi-experimental variation in eligibility rules to identify the effects•Results show a robust increase of at least 12% on the layoff probability•The effect is larger during the Great Recession and in the South We study how unemployment benefit eligibility affects the layoff exit rate by exploiting quasi-experimental variation in eligibility rules in Italy. By using a difference-in-differences estimator, we find an instantaneous increase of about 12% in the layoff probability when unemployment benefit eligibility is attained, which persists for at least 16 weeks. These findings are robust to different identifying assumptions and are mostly driven by jobs started after the onset of the Great Recession and in the South.