Bismarck versus Beveridge: Flat- and earnings-related unemployment insurance in an efficiency wage framework
AbstractA higher unemployment compensation increases the incentive to shirk in efficiency wage models. If there is a stronger dependence of unemployment benefits on current earnings, these incentives will be reduced. An unemployment insurance with earnings-related benefits is thus characterised by higher employment than one with flat-rate benefits. It is investigated under which conditions this advantage persists in the longer term when financial constraints such as an ex-post constant level of benefits, a cash hmit or a balanced budget rule apply, or when firms are constrained to zero profits. --
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Bibliographic InfoPaper provided by University of Konstanz, Department of Economics in its series Discussion Papers, Series 1 with number 291.
Date of creation: 1998
Date of revision:
balanced budget; cash limit; earnings-related benefits; efficiency wages; flat-rate benefits; long-run; unemployment insurance;
Find related papers by JEL classification:
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Private Pensions
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
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