Employment And Welfare Effects Of A Two-Tier Unemployment Compensation System
AbstractIn many OECD countries, e.g. in Germany, France, or the UK, unemployment compensation consists of unemployment insurance and unemployment assis-tance. Unemployment assistance is provided subsequent to the expiration of entitlement to unemployment insurance and is lower. The e«ects of this two-tier unemployment compensation system are studied in a general equi-librium job search model with endogenous distributions of income, wealth, and employment which is calibrated with regard to the characteristics of the German economy. Our results are as follows: i) employment is a decreas-ing function of both unemployment insurance and unemployment assistance. ii) Savings are (not) a monotone increasing function of unemployment in-surance (unemployment assistance payments). iii) Optimal unemployment compensation payments are found to be a decreasing function over time.
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Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2000 with number 3.
Date of creation: 05 Jul 2000
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- Heer, Burkhard, 2003. "Employment and Welfare Effects of a Two-Tier Unemployment Compensation System," International Tax and Public Finance, Springer, vol. 10(2), pages 147-68, March.
- Burkhard Heer, 2000. "Employment and Welfare Effects of a Two-Tier Unemployment Compensation System," CESifo Working Paper Series 297, CESifo Group Munich.
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