Temporary Layoffs and Unemployment Insurance: Is Experience Rating Desirable?
This paper explores how the introduction of an experience-rated system of unemployment insurance affects employment and welfare in a model where implicit contracts between firms and workers give rise to wage rigidities and unemployment. In the literature, it has been argued that experience-rated systems of unemployment insurance may reduce long-term employment as firms anticipate the higher costs of layoffs implied by experience rating. Our analysis shows that the introduction of experience rating may increase or decrease long-term employment but it unambiguously raises welfare. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2005.
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Volume (Year): 6 (2005)
Issue (Month): 4 (November)
Pages: 471-483
| Handle: | RePEc:bla:germec:v:6:y:2005:i:4:p:471-483 |
| Contact details of provider: | Web page: http://www.blackwellpublishing.com/journal.asp?ref=1465-6485 Email: More information through EDIRC
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- Samuel Bentolila & Giuseppe Bertola, 1990. "Firing Costs and Labour Demand: How Bad is Eurosclerosis?," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 381-402. Full references (including those not matched with items on IDEAS)
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