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Optimal Unemployment Benefit Policy And The Firm Productivity Distribution

Listed author(s):
  • Tomer Blumkin

    ()

    (BGU)

  • Leif Danziger

    ()

    (BGU)

  • Eran Yashiv

    (The Eitan Berglas School of Economics, Tel-Aviv University, Israel)

Abstract This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral-hazard or consumption-smoothing considerations. We consider a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a declining time profile of benefits, the government can affect the equilibrium wage profile in a manner that enhances the sorting of workers across low- and high-productivity firms. We demonstrate that optimal government policy depends on the dispersion and skewness of the firms’ productivity distribution.

(This abstract was borrowed from another version of this item.)

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File URL: http://in.bgu.ac.il/en/humsos/Econ/Workingpapers/1508.pdf
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Paper provided by Ben-Gurion University of the Negev, Department of Economics in its series Working Papers with number 1508.

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Length: 34 pages
Date of creation: 2015
Handle: RePEc:bgu:wpaper:1508
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