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The Unemployment Benefit System: a Redistributive or an Insurance Institution?

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  • Daniel Cardona

    ()

  • Fernando Sánchez-Losada

Abstract

We analyze the effects of the unemployment benefit system on the economy. In particular, we focus on both the tax structure and the unemployment benefits composition. We show that if the unemployment benefit system is only paid by firms, then employment and production are maximized. Moreover, the way the government contemplates the unemployment benefit system, either as a redistributive or as an insurance institution, is crucial for the dynamics and the equilibria of the economy.

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Bibliographic Info

Paper provided by Universitat de les Illes Balears, Departament d'Economía Aplicada in its series DEA Working Papers with number 8.

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Date of creation: Dec 2004
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Handle: RePEc:ubi:deawps:8

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Keywords: unemployment benefit system; payroll tax; wage tax.;

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  17. Beissinger, Thomas & Egger, Hartmut, 2001. "Dynamic Wage Bargaining if Benefits are Tied to Individual Wages," IZA Discussion Papers 389, Institute for the Study of Labor (IZA).
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  19. Koskela , Erkki, 2001. "Labour taxation and employment in trade union models: A partial survey," Research Discussion Papers 19/2001, Bank of Finland.
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