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In-Work Benefits in Search Equilibrium

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Author Info
Kolm, Ann-Sofie () (Dept. of Economics, Stockholm University)
Tonin, Mirco () (Institute for International Economic Studies)

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Abstract

We study the general equilibrium effects of in-work beneifts in a search framework. Introducing in-work benefits reduces equilibrium unemployment, moderate wages, and boost participation and search. Total employment increases as a result. Considering in-work benefits in a general equilibrium setting reveals that employment increases mainly though the impact on job creation. This is in contrast to what is usually stressed, namely that employment increases because individuals are provided with incentives to take a job.

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Publisher Info
Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2006:12.

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Length: 40 pages
Date of creation: 21 Dec 2006
Date of revision:
Handle: RePEc:hhs:sunrpe:2006_0012

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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Phone: +46 8 16 20 00
Fax: +46 8 16 14 25
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Web page: http://www.ne.su.se/
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Related research
Keywords: In-work benefits unemployment participation

Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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    Other versions:
  4. Jeremy Lise & Shannon Seitz & Jeffrey Smith, 2005. "Equilibrium Policy Experiments and the Evaluation of Social Programs," Working Papers 1076, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
  5. Eissa, Nada & Liebman, Jeffrey B, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 605-37, May. [Downloadable!] (restricted)
    Other versions:
  6. Boone, Jan & Bovenberg, Lans, 2006. "Optimal welfare and in-work benefits with search unemployment and observable abilities," Journal of Economic Theory, Elsevier, vol. 126(1), pages 165-193, January. [Downloadable!] (restricted)
  7. Stefan Boeters & Reinhold Schnabel & Nicole Gürtzgen, 2006. "Reforming Social Welfare in Germany: An Applied General Equilibrium Analysis," German Economic Review, Blackwell Publishing, vol. 7, pages 363-388, November. [Downloadable!] (restricted)
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  8. Michalopoulos, Charles & Robins, Philip K. & Card, David, 2005. "When financial work incentives pay for themselves: evidence from a randomized social experiment for welfare recipients," Journal of Public Economics, Elsevier, vol. 89(1), pages 5-29, January. [Downloadable!] (restricted)
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