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Staying on the Dole

Author

Listed:
  • Holger Strulik

    (University of Hannover)

  • Jean-Robert Tyran

    (Department of Economics, University of Copenhagen)

  • Paolo Vanini

    (University of Zurich)

Abstract

We develop a simple model of short- and long-term unemployment to study how labor market institutions interact with labor market conditions and personal characteristics of the unemployed. We analyze how the decision to exit unemployment and to mitigate human capital degradation by retraining depends on education, skill degradation, age, labor market tightness, taxes, unemployment insurance benefits and welfare assistance. We extend our analysis by allowing for time-inconsistent choices and demonstrate the possibility of an unemployment trap.

Suggested Citation

  • Holger Strulik & Jean-Robert Tyran & Paolo Vanini, 2006. "Staying on the Dole," Discussion Papers 06-18, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:0618
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    References listed on IDEAS

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    More about this item

    Keywords

    unemployment; skill degradation; retraining; unemployment benefits; welfare assistance; present-biased preferences;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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