Incentive Contracts and Efficient Unemployment Benefits in a Globalized World
AbstractSeveral European countries have reformed their labor market institutions. Incentive effects of unemployment benefits have been an important aspect of these reforms. We analyse this issue in a principal-agent model, higher level of unemployment benefits improves the workers' position in wage bargaining, leading to stronger effort incentives and higher output. However, it also reduces incentives for labor market participation. Accordingly, there is a trade-off. We analyze how changes in the economic environment such as globalization and better educated workers affect this trade-off.
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Bibliographic InfoPaper provided by University of Oldenburg, Department of Economics in its series Working Papers with number V-348-12.
Length: 22 pages
Date of creation: Aug 2012
Date of revision: Aug 2012
Publication status: Published in Oldenburg Working Papers V-348-12
Unemployment benefits; incentive contracts; Nash bargaining; moral hazard; globalization;
Find related papers by JEL classification:
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-09 (All new papers)
- NEP-CTA-2013-06-09 (Contract Theory & Applications)
- NEP-HRM-2013-06-09 (Human Capital & Human Resource Management)
- NEP-LAB-2013-06-09 (Labour Economics)
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