Active versus Passive Policies of Unemployment: Growth and Public Finance Perspectives
AbstractThis paper develops a general equilibrium endogenous growth model in an overlapping generations framework, and compares, in terms of economic growth, a passive unemployment policy (unemployment insurance) with an active unemployment policy (government expenditures targeted towards improving the job- finding probability of an unemployed). Besides, the standard result of unemployment being growth reducing, under realistic parameterization, we show that the government, under an active policy, can generate higher growth without any compromise on its own consumption, when compared to the unemployment benefit regime. The result, however, depends crucially on the efficiency with which the resources are spent in creating employment.
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Bibliographic InfoPaper provided by University of Pretoria, Department of Economics in its series Working Papers with number 200620.
Length: 14 pages
Date of creation: Oct 2006
Date of revision:
Active and Passive Policies of Unemployment; Unemployment Benefits; Endogenous Growth;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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