Wage Bargaining and Employment under Different Employment Insurance Contribution Policies
AbstractWe examine alternative unemployment insurance (UI) contribution policies in an economy where wages are set by a monopoly union and firms face stochastic revenue shocks. Unemployment benefits are financed from UI contributions that the government imposes on firms. We show that the impact of changes in the UI contribution on the union's wage demand and on the firm's demand for labor depends crucially on the elasticity of substitution between the factors of production in the economy. Thus, the consequences of the different UI policies change fundamentally with alterations in the elasticity.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 60 (2004)
Issue (Month): 4 (December)
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Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
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