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Employment subsidies and substitutable skills : An equilibrium matching approach

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  • Gabriele, CARDULLO

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

  • Bruno, VANDERLINDEN

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

Abstract

This search-matching model is well suited for an equilibrium evaluation of labor market policies. When those policies are targeted on some groups, the usual juxtaposition of labor markets is however a shortcoming. There is a need for a setting where workers’ productivity depends on employment levels in all markets. This paper provides such a theoretical setting. We first develop a streamlined model and then show that it can be extended to deal with interactions among various labor market and fiscal policies. Simulation results focus on the effects of employment subsidies and in-work benefits and on their interactions with the profile of unemployment benefits and with active labor market programs.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2006010.

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Length: 44
Date of creation: 01 Mar 2006
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Handle: RePEc:ctl:louvec:2006010

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Keywords: Unemployment; search-matching equilibrium; wage bargaining; reductions of social security contributions; unemployment insurance; labor market programs;

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References

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Citations

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Cited by:
  1. Bucher, Anne, 2010. "Impacts of hiring subsidies targeted at the long-term unemployed on the low-skilled labor market: The French experience," Economic Modelling, Elsevier, vol. 27(2), pages 553-565, March.
  2. Belan, Pascal & Gregoir, Stéphane & Carré, Martine, 2009. "Subsidizing low-skilled jobs in a dual labor market," Economics Papers from University Paris Dauphine 123456789/8134, Paris Dauphine University.
  3. Jahn, Elke J. & Wagner, Thomas, 2008. "Do Targeted Hiring Subsidies and Profiling Techniques Reduce Unemployment?," IZA Discussion Papers 3768, Institute for the Study of Labor (IZA).
  4. Alessio J. G. Brown, & Christian Merkl & Dennis J. Snower, 2006. "Comparing the Effectiveness of Employment Subsidies," Kiel Working Papers 1302, Kiel Institute for the World Economy.
  5. Philip Schuster, 2010. "Labor Market Policy Instruments and the Role of Economic Turbulence," University of St. Gallen Department of Economics working paper series 2010 2010-29, Department of Economics, University of St. Gallen.
  6. Tonin, Mirco & Kolm, Ann-Sofie, 2011. "In-Work Benefits and Unemployment," IZA Discussion Papers 5473, Institute for the Study of Labor (IZA).
  7. Conny Wunsch, 2009. "Optimal Use of Labor Market Policies: The Role of Job Search Assistance," CESifo Working Paper Series 2890, CESifo Group Munich.
  8. Victoria Osuna, 2009. "Should we tax overtime, subsidize the wage or subsidize employment?," Working Papers 09.03, Universidad Pablo de Olavide, Department of Economics.

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