Should Unemployment Benefits Be Related to Previous Earnings?
In most OECD countries, unemployment benefits are tied to individual previous labor earnings. We study the progressivity of this indexation in a calibratedgeneral-equilibrium overlapping-generations model with flexible labor supply, keeping the government expenditures on unemployment insurance constant over the different scenarios. We find that higher indexation of unemployment benefits to previous earnings has only small quantitative effects on output, employment, the distribution of income, and welfare. We also provide a tentative analysis of the most recent Hartz IV reform, where unemployment benefits decrease sharply after one year of unemployment. This reform is found to have positive but very small efficiency and welfare effects.
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.
Volume (Year): 62 (2006)
Issue (Month): 4 (December)
|Contact details of provider:|| Web page: http://www.mohr.de/fa|
|Order Information:|| Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany|
When requesting a correction, please mention this item's handle: RePEc:mhr:finarc:urn:sici:0015-2218(200612)62:4_530:subbrt_2.0.tx_2-0. 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: (Thomas Wolpert)
If references are entirely missing, you can add them using this form.