Time Limits in a Two-tier Unemployment Benefit Scheme under Involuntary Unemployment

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Time Limits in a Two-tier Unemployment Benefit Scheme under Involuntary Unemployment

Author Info

Christian Holzner ()
Volker Meier ()
Martin Werding

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Abstract

The 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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Publisher Info
Paper 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.

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Date of creation: 2006
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Handle: RePEc:ces:ifowps:_29

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Find related papers by JEL classification:
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, and Vacancies - - - General

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