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On the Optimality of Search Matching Equilibrium When Workers Are Risk Averse Author info | Abstract | Publisher info | Download info | Related research | Statistics ETIENNE LEHMANN
BRUNO VAN DER LINDEN
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This paper revisits the normative properties of search-matching economies when homogeneous workers have concave utility functions and wages are bargained over. The optimal allocation of resources is characterized first when information is perfect and second when search effort is not observable. In the former case, employees should be unable to extract a rent. The optimal marginal tax rate is then 100%. As search effort becomes unobservable, an appropriate positive rent is needed and the optimal marginal tax rate is lower. Moreover, the pretax wage is lower in order to boost labor demand. Finally, in both cases, nonlinear income taxation is a key complement to unemployment insurance. Copyright 2007 Blackwell Publishing, Inc..
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Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory .
Volume (Year): 9 (2007)
Issue (Month): 5 (October)
Pages: 867-884
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Handle: RePEc:bla:jpbect:v:9:y:2007:i:5:p:867-884Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
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Paper Lehmann, Etienne & Van der Linden, Bruno, 2004.
"On the Optimality of Search Matching Equilibrium When Workers Are Risk Averse ,"
IZA Discussion Papers
1172, Institute for the Study of Labor (IZA).
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"On the optimality of search matching equilibrium when workers are risk averse ,"
Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper
2002023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
[Downloadable!] E. Lehmann & B. Van Der Linden, 2004.
"On the Optimality of Search Matching Equilibrium when workers are risk adverse ,"
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Bruno, VAN DER LINDEN, 2003.
"Unemployment insurance and training in an equilibrium matching model with heterogeneous agents ,"
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Garibaldi, Pietro & Wasmer, Etienne, 2003.
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