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Is It Worth Reducing Exclusion?

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Author Info

  • Fabrice Collard

    ()
    (CEPREMAP)

  • Patrick F�ve

    ()
    (Nantes University and CEPREMAP)

  • Fran�ois Langot

    ()
    (University of Le Mans and CEPREMAP)

Abstract

We study the welfare implications of shutting down long-run unemployment and exclusion. We develop a heterogeneous-agents model along the lines of Krussell and Smith (1998) that takes the existence of uninsured long-run unemployment explicitly into account. The status of a given individual in the labor market is described by a three-states markov chain. Long-run unemployment is characterized by its higher persistence in the model and by lower unemployment spells. We assume that the government is able to eliminate long-run unemployment, and then we evaluate the potential welfare gains of such a policy.

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Bibliographic Info

Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 1999 with number 142.

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Date of creation: 01 Mar 1999
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Handle: RePEc:sce:scecf9:142

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Postal: CEF99, Boston College, Department of Economics, Chestnut Hill MA 02467 USA
Fax: +1-617-552-2308
Web page: http://fmwww.bc.edu/CEF99/
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