Time Limits in a Two-tier Unemployment Benefit Scheme under Involuntary Unemployment
AbstractThe consequences of introducing or tightening time limits on receiving high unemploymentbenefits are studied in a shirking model. Stricter time limits have an ambiguousimpact on the net wage, and changes of utility levels of employed workers and recipientsof high unemployment benefits have the same sign as the variation in the netwage. The utility differential between the two groups of unemployed shrinks. The relativeincome position of skilled workers moves in the same direction as the net wage ofunskilled workers. When access to high benefits is denied for caught shirkers, strictertime limits may decrease employment.
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Bibliographic InfoPaper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Papers No. 29.
Date of creation: 2006
Date of revision:
Unemployment benefits; welfare benefits; time limits; efficiency wages.;
Other versions of this item:
- Christian Holzner & Volker Meier & Martin Werding, 2010. "Time Limits in a Two-tier Unemployment Benefit Scheme under Involuntary Unemployment," CESifo Economic Studies, CESifo, vol. 56(2), pages 251-277, June.
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
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