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Long-term unemployment and subsidizing vacancies in a growth-matching model

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  • Birk, Angela
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    Abstract

    How can long-term unemployment be reduced by policy measures of the government? In this paper a growth-matching-model is developed, in which the unemployment pool consists of heterogeneous unemployed workers, short-term and long-term unemployed, and with an endogenous skill-depreciation of the long-term unemployed emerging as technical progress accelerates. For innovation countries characterized by rapid technical progress we show that through subsidizing vacancy creation which causes a substitution and an income effect long-term unemployment can be reduced. Since the positive substitution effect implied by subsidizing vacancy creation outweighs the negative income effect induced by taxing the household?s income, a positive employment effect results leading to additional job-matches and decreasing unemployment duration. Therefore, the introduction of subsidies will be favorable for achieving a reduction in long-term unemployment. -- Wie kann die Langzeitarbeitslosigkeit durch geeignete Politikmaßnahmen des Staates reduziert werden? In diesem Artikel wird ein Wachstums-Matching-Modell entwickelt, das durch heterogene Arbeitslose ? Kurz- und Langzeitarbeitslose ? und bei steigendem technischen Fortschritt durch die endogene Abwertung von Fähigkeiten und Fertigkeiten der Langzeitarbeitlosen charakerisiert ist. Für Innovationsländer, die mit akzelerierendem technischen Fortschritt konfrontiert sind, wird gezeigt, dass die Subventionierung von Vakanzen, bei der sowohl ein Substitutions- wie auch ein Einkommenseffekt entsteht, eine Reduzierung der Langzeitarbeitslosigkeit impliziert. Da der positive aus der Vakanzsubventionierung resultierende Substitutionseffekt den negativen Einkommenseffekt, der durch die Besteuerung der Einkommen verursacht wird, überwiegt, wird ein positiver Beschäftigungseffekt generiert. Dieser positive Beschäftigungseffekt führt zu zusätzlichen Job-Matchings und sinkender Arbeitslosigkeitsdauer. Somit kann der Staat mit Hilfe der Subventionierung von Vakanzen, eine Verringerung der Langzeitarbeitslosigkeit erreichen.

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    Paper provided by Hamburg Institute of International Economics (HWWA) in its series HWWA Discussion Papers with number 131.

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    Date of creation: 2001
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    Handle: RePEc:zbw:hwwadp:26194

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    Keywords: long-term unemployment; growth; search; matching; subsidies;

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    References

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    1. Merz, Monika, 1999. "Heterogeneous job-matches and the cyclical behavior of labor turnover," Journal of Monetary Economics, Elsevier, vol. 43(1), pages 91-124, February.
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    12. Birk, Angela, 2001. "Qualification-mismatch and long-term unemployment in a growth-matching model," HWWA Discussion Papers 128, Hamburg Institute of International Economics (HWWA).
    13. Acemoglu, Daron, 1995. "Public Policy in a Model of Long-Term Unemployment," Economica, London School of Economics and Political Science, vol. 62(246), pages 161-78, May.
    14. Coles, Melvyn & Masters, Adrian, 2000. "Retraining and long-term unemployment in a model of unlearning by not doing," European Economic Review, Elsevier, vol. 44(9), pages 1801-1822, October.
    15. Lockwood, Ben, 1991. "Information Externalities in the Labour Market and the Duration of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 733-53, July.
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