General Equilibrium Effects of Unemployment Compensation with Labor Force Participation
This article examines the effects of unemployment compensation when the size of the labor force depends on unemployment benefits. The analysis is based on an aggregate model with search and matching in which unemployment compensation affects the wage determination process and the number of jobs and workers. As with partial equilibrium models, unemployment compensation raises the unemployment rate and the ratio of unemployed to vacancies. However, wages may go up or down and firms may be better-off. Generally, employed workers are worse-off. Unemployment compensation transfers income from employed factors to unemployed factors, leading to greater input levels. Copyright 1995 by University of Chicago Press.
When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:v:13:y:1995:i:4:p:623-52. 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: (Journals Division)
If references are entirely missing, you can add them using this form.