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Optimal Employment Subsidies to Heterogeneous Workers: Unemployment-Trap, Job-Additionality and Tax Rates

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  • Pierre Picard

Abstract

Unemployment and welfare benefits generate unemployment traps. In this paper, we design the optimal employment subsidies that allow governments to reduce unemployment traps under constant budget deficit and without diminishing workers' welfare. We explore the effects of work incentives on the shape and on the properties of employment subsidies. We finally address the issues of self-help effect and job-additionality.

Suggested Citation

  • Pierre Picard, 2001. "Optimal Employment Subsidies to Heterogeneous Workers: Unemployment-Trap, Job-Additionality and Tax Rates," Annals of Economics and Statistics, GENES, issue 62, pages 97-125.
  • Handle: RePEc:adr:anecst:y:2001:i:62:p:97-125
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    File URL: http://www.jstor.org/stable/20076283
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    Cited by:

    1. Daniel Cardona & Fernando Sánchez-Losada, 2004. "The Unemployment Benefit System: a Redistributive or an Insurance Institution?," DEA Working Papers 8, Universitat de les Illes Balears, Departament d'Economía Aplicada.

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