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Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance

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  • Ek Susanne

    ()
    (Uppsala)

  • Holmlund Bertil

    ()
    (Uppsala)

Abstract

In this paper we develop an equilibrium search and matching model where two-person families as well as singles participate in the labor market. We show that equilibrium entails wage dispersion among equally productive risk-averse workers. Marital status as well as spousal labor market status matters for wage outcomes. In general, employed members of two-person families receive higher wages than employed singles. The model is applied to a welfare analysis of alternative unemployment insurance systems, recognizing the role of spousal employment as a partial substitute for public insurance. The optimal system involves benefit differentiation based on marital status as well as spousal labor market status.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 10 (2010)
Issue (Month): 1 (May)
Pages: 1-27

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Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:47

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  1. Guler, Bulent & Guvenen, Fatih & Violante, Giovanni L., 2012. "Joint-search theory: New opportunities and new frictions," Journal of Monetary Economics, Elsevier, Elsevier, vol. 59(4), pages 352-369.
  2. CASAMATTA, Georges & CREMER, Helmuth & PESTIEAU, Pierre, . "Political sustainability and the design of social insurance," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1449, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Fredriksson, Peter & Holmlund, Bertil, 2003. "Improving incentives in unemployment insurance: A review of recent research," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2003:5, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. David Neumark & Sanders D. Korenman, 1988. "Does marriage really make men more productive?," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 29, Board of Governors of the Federal Reserve System (U.S.).
  5. Ek Susanne & Holmlund Bertil, 2010. "Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, De Gruyter, vol. 10(1), pages 1-27, May.
  6. Laszlo Goerke, 2000. "Bismarck versus Beveridge. Flat-Rate and Earnings-Related Unemployment Insurance in a General Efficiency Wage Framework," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 57(3), pages 243-, May.
  7. Robert E. Hall & Paul R. Milgrom, 2005. "The Limited Influence of Unemployment on the Wage Bargain," NBER Working Papers 11245, National Bureau of Economic Research, Inc.
  8. Gruber, Jonathan, 1997. "The Consumption Smoothing Benefits of Unemployment Insurance," American Economic Review, American Economic Association, American Economic Association, vol. 87(1), pages 192-205, March.
  9. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
  10. Merz, Monika, 1995. "Search in the labor market and the real business cycle," Journal of Monetary Economics, Elsevier, Elsevier, vol. 36(2), pages 269-300, November.
  11. Cullen, Julie Berry & Gruber, Jonathan, 2000. "Does Unemployment Insurance Crowd Out Spousal Labor Supply?," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 18(3), pages 546-72, July.
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Cited by:
  1. Ek Spector, Susanne & Holmlund, Bertil, 2010. "Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance," IZA Discussion Papers 4701, Institute for the Study of Labor (IZA).
  2. Forslund, Anders & Fredriksson, Peter, 2009. "Income support systems, labour supply incentives and employment – some cross-country evidence," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2009:32, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  3. Malmberg, Jonas, 2010. "Posting Post Laval International and National Responses," Working Paper Series, Center for Labor Studies, Uppsala University, Department of Economics 2010:5, Uppsala University, Department of Economics.

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