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Subsidizing versus Experience Rating of Unemployment Insurance in Unionized Labor Markets

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  • Pekka Sinko
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    Abstract

    Alternative ways to organize government subsidies to unemployment insurance (UI) are analyzed in a right-to-manage model where industry-level unions run UI funds of their own. It is shown that equilibrium unemployment is decreasing in the share of UI financed by the employed union members. A reduction in the proportional subsidies matched by an increase in the lump-sum grant is shown to bring about wage moderation and improve employment. If labor-market parties can influence the level of benefits, a subsidy scheme with fixed assistance per unemployed is preferable to one covering a fixed share of the total UI costs.

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    Bibliographic Info

    Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

    Volume (Year): 60 (2004)
    Issue (Month): 2 (August)
    Pages: 186-

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    Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200408)60:2_186:sverou_2.0.tx_2-x

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    Web page: http://www.mohr.de/fa

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    Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
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    Keywords: unemployment insurance; wage formation; experience rating;

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    Cited by:
    1. Sven Wehke, 2007. "Union Wages, Hours of Work and the Effectiveness of Partial Coordination Agreements," FEMM Working Papers 07019, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    2. Dittrich, Marcus, 2006. "Welfare Effects of Union Bargaining Centralisation in a Two-Sector Economy," MPRA Paper 11, University Library of Munich, Germany, revised Sep 2006.

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