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Time Limits on Welfare Use under Involuntary Unemployment

Author

Listed:
  • Christian Holzner
  • Volker Meier
  • Martin Werding

Abstract

The impacts of introducing or tightening time limits on welfare use are studied in an efficiency wage model. Those losing access to regular benefits receive some smaller benefit, which can be interpreted as food stamps. Stricter time limits raise both employment and profits and generally reduce the tax rate. The impact on the net wage is ambiguous. Changes of utility levels of employed workers and recipients of regular social assistance have the same sign as the variation in the net wage. The utility differential between social assistance recipients and food stamp participants shrinks.

Suggested Citation

  • Christian Holzner & Volker Meier & Martin Werding, 2004. "Time Limits on Welfare Use under Involuntary Unemployment," CESifo Working Paper Series 1220, CESifo.
    • Handle: RePEc:ces:ceswps:_1220
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    welfare benefits; time limits; efficiency wages;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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