Welfare differentials across French and US labor markets $e_A general equilibrium interpretation
AbstractThe paper computes lifetime welfare functions for French and American workers. For the vast majority of workers, we find that the lifetime discrepancy between the welfare of an employed and that of an unemployed worker appear to be quite similar in the two countries, corresponding to 9 monthly wages in the US and 13 monthly wages in France. From these and other values, we then calibrate standard parameters of equilibrium theories of unemployment such as hiring and firing costs and the quantitative incidence of unemployment benefit onto the equilibrium hiring rates. We find that the latter factor dominates the other. Because of the heterogeneity that we document on the labor market, we show, however, why reducing the level of French unemployment benefits to the level of American ones would dramatically reduce the welfare of the most vulnerable workers on the labor market.
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Bibliographic InfoPaper provided by CEPREMAP in its series CEPREMAP Working Papers (Couverture Orange) with number 9904.
Length: 40 pages
Date of creation: 1999
Date of revision:
Find related papers by JEL classification:
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
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- Cahuc, Pierre & Malherbet, Franck, 2002.
"Unemployment Compensation Finance and Labor Market Rigidity,"
IZA Discussion Papers
581, Institute for the Study of Labor (IZA).
- Cahuc, Pierre & Malherbet, Franck, 2004. "Unemployment compensation finance and labor market rigidity," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 481-501, March.
- Pierre Cahuc & Franck Malherbet, 2001. "Unemployment Compensation Finance and Labor Market Rigidity," Working Papers 2001-37, Centre de Recherche en Economie et Statistique.
- Cahuc, Pierre & Malherbet, Franck, 2002. "Unemployment Compensation Finance and Labour Market Rigidity," CEPR Discussion Papers 3512, C.E.P.R. Discussion Papers.
- Audra J. Bowlus & Jean-Marc Robin, 2011. "An International Comparison of Lifetime Inequality: How Continental Europe Resembles North America," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20116, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
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