How to Finance Unemployment Benefits in an Economy with Search Generated Equilibrium Unemployment
AbstractIn this paper, the effects of alternatives to finance unemployment benefits on employment and wages are examined in a model with search generated equilibrium unemployment. It is demonstrated that employment improves if a value--added tax is levied, as opposed to a social system contribution, where employees bear part of the contribution. In addition, it is shown that shifting the burden of the contribution to the Social Security system from employers to employees may have negative employment effects if the benefits are not taxed. This effect vanishes if the benefits are taxed.
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Bibliographic InfoPaper provided by EconWPA in its series Public Economics with number 0103001.
Length: 21 pages
Date of creation: 15 Mar 2001
Date of revision:
Note: Type of Document - Adobe PDF; prepared on IBM PC - LaTeX; to print on HP; pages: 21 ; figures: included
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job search; unemployment; taxes;
Find related papers by JEL classification:
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
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