Employment and Welfare Effects of a Two-Tier Unemployment Compensation System
In Germany, as in many OECD countries, such as the United Kingdom, unemployment compensation consists of unemployment insurance and unemployment assistance. Unemployment assistance is provided subsequent to the expiration of entitlement to unemployment insurance and is lower. The effects of this two-tier unemployment compensation system are studied in a general equilibrium job search model with endogenous distributions of income, wealth, and employment which is calibrated with regard to the characteristics of the German economy. Our results are as follows: (i) employment is a decreasing function of both unemployment insurance and unemployment assistance. (ii) Aggregate savings are (not) a monotone decreasing function of unemployment assistance (unemployment insurance) payments. (iii) Optimal unemployment compensation payments are found to be a decreasing function over time. Copyright 2003 by Kluwer Academic Publishers
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Miller, Bruce L., 1976. "The effect on optimal consumption of increased uncertainty in labor income in the multiperiod case," Journal of Economic Theory, Elsevier, vol. 13(1), pages 154-167, August.
- Wang, Cheng & Williamson, Stephen, 1996.
"Unemployment insurance with moral hazard in a dynamic economy,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 44(1), pages 1-41, June.
- Wang, C. & Williamson, S., 1995. "Unemployment Insurance with Moral Hazard in a Dynamic Economy," GSIA Working Papers 1995-13, Carnegie Mellon University, Tepper School of Business.
- Stephen Williamson & Cheng Wang, 1995. "Unemployment Insurance with Moral Hazard in a Dynamic Economy," Macroeconomics 9506002, EconWPA.
- Wang, Cheng & Williamson, Steve, 1996. "Unemployment Insurance with Moral Hazard in a Dynamic Economy," Staff General Research Papers 5088, Iowa State University, Department of Economics.
- Williamson, S. & Wang, C., 1995. "Unemployment Insurance with Moral Hazard in a Dynamic Economy," Working Papers 95-09, University of Iowa, Department of Economics.
- Hopenhayn, Hugo A & Nicolini, Juan Pablo, 1997.
"Optimal Unemployment Insurance,"
Journal of Political Economy,
University of Chicago Press, vol. 105(2), pages 412-38, April.
- Lars Ljungqvist & Thomas Sargent, 1999. "Matlab code for Hopenhayn-Nicolini's optimal unemployment insurance model," QM&RBC Codes 18, Quantitative Macroeconomics & Real Business Cycles.
- Hopenhayn, H. & Nicolini, P.J., 1996. "Optimal Unemployment Insurance," RCER Working Papers 421, University of Rochester - Center for Economic Research (RCER).
- Fredriksson, Peter & Holmlund, Bertil, 2001.
"Optimal Unemployment Insurance in Search Equilibrium,"
Journal of Labor Economics,
University of Chicago Press, vol. 19(2), pages 370-99, April.
- Fredriksson, P. & Holmlund, B., 1998. "Optimal Unemployment Insurance in Search Equilibrium," Papers 1998-2, Uppsala - Working Paper Series.
- Fredriksson, Peter & Holmlund, Bertil, 1998. "Optimal Unemployment Insurance in Search Equilibrium," Working Paper Series 1998:2, Uppsala University, Department of Economics.
- Jennifer Hunt, 1992.
"The Effect of Unemployment Compensation on Unemployment Duration in Germany,"
Discussion Papers of DIW Berlin
50, DIW Berlin, German Institute for Economic Research.
- Hunt, Jennifer, 1995. "The Effect of Unemployment Compensation on Unemployment Duration in Germany," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 88-120, January.
- Huggett, Mark, 1993. "The risk-free rate in heterogeneous-agent incomplete-insurance economies," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 953-969.
- DREZE, Jacques H. & MODIGLIANI, Franco, .
"Cosumption decisions under uncertainty,"
CORE Discussion Papers RP
119, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Hansen, G.D. & Imrohoroglu, A., 1990.
"The Role Of Unemployment Insurance In An Economy With Liquidity Constraints And Moral Hazard,"
21, California Los Angeles - Applied Econometrics.
- Hansen, Gary D & Imrohoroglu, Ayse, 1992. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 118-42, February.
- Gary D. Hansen & Ayse Imrohoroglu, 1990. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," UCLA Economics Working Papers 583, UCLA Department of Economics.
- Fehr, Hans, 1997.
"Belastungswirkungen der aktuellen Reformvorschläge zur Einkommensbesteuerung und zur Alterssicherung,"
101, University of Tübingen, School of Business and Economics.
- Hans Fehr, 1997. "Belastungswirkungen der aktuellen Reformvorschläge zur Einkommensbesteuerung und zur Alterssicherung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 66(3-4), pages 362-381.
- Dale T. Mortensen, 1977.
"Unemployment insurance and job search decisions,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
- Cahuc, Pierre & Lehmann, Etienne, 1999. "Should unemployment benefits decrease with unemployment spell ?," CEPREMAP Working Papers (Couverture Orange) 9916, CEPREMAP.
- Steiner, Viktor, 1997. "Extended benefit entitlement periods and the duration of unemployment in West Germany," ZEW Discussion Papers 97-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Burda, Michael & Wyplosz, Charles, 1994.
"Gross worker and job flows in Europe,"
European Economic Review,
Elsevier, vol. 38(6), pages 1287-1315, June.
- Andrew Atkeson & Robert E. Lucas, Jr., 1993. "Effciency and Equality in a Simple Model of Unemployment Insurance," NBER Working Papers 4381, National Bureau of Economic Research, Inc.
- Burkhard Heer & Ludger Linnemann, . "Procyclical Labor Productivity: Sources and Implications," Computing in Economics and Finance 1997 178, Society for Computational Economics.
- S. Rao Aiyagari, 1994.
"Uninsured Idiosyncratic Risk and Aggregate Saving,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 109(3), pages 659-684.
- Levhari, David & Mirman, Leonard J & Zilcha, Itzhak, 1980. "Capital Accumulation under Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(3), pages 661-71, October.
- Vincenzo Quadrini & José-Víctor Ríos-Rull, 1997. "Understanding the U.S. distribution of wealth," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 22-36.
- Broer, D. Peter & Lassila, Jukka, . "Pension Policies and Public Debt in Dynamic CGE Models," ETLA A, The Research Institute of the Finnish Economy, number 23, 01.
- James Costain, 1997. "Unemployment insurance with endogenous search intensity and precautionary saving," Economics Working Papers 243, Department of Economics and Business, Universitat Pompeu Fabra.
- Steven Shavell & Laurence Weiss, 1978.
"The Optimal Payment of Unemployment Insurance Benefits over Time,"
Cowles Foundation Discussion Papers
503, Cowles Foundation for Research in Economics, Yale University.
- Shavell, Steven & Weiss, Laurence, 1979. "The Optimal Payment of Unemployment Insurance Benefits over Time," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1347-62, December.
- Imrohoroglu, Ayse & Imrohoroglu, Selahattin & Joines, Douglas H, 1995. "A Life Cycle Analysis of Social Security," Economic Theory, Springer, vol. 6(1), pages 83-114, June.
- Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:10:y:2003:i:2:p:147-68. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.