Employment and Welfare Effects of a Two-Tier Unemployment Compensation System
In many OECD countries, e.g. in Germany, France, or the UK, unemploy-ment 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 in-come, wealth, and employment which is calibrated with regard to the charac-teristics of the German economy. Our results are as follows: i) employment is a decreasing function of both unemployment insurance and unemployment assistance. ii) Savings are (not) a monotone increasing function of unemployment insurance (unemployment assistance payments). iii) Optimal unemployment compensation payments are found to be a decreasing function over time.
|Date of creation:||2000|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.de
More information through EDIRC
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.:
- 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.
- 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.
- Williamson, S. & Wang, C., 1995. "Unemployment Insurance with Moral Hazard in a Dynamic Economy," Working Papers 95-09, University of Iowa, Department of Economics.
- 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.
- Stephen Williamson & Cheng Wang, 1995. "Unemployment Insurance with Moral Hazard in a Dynamic Economy," Macroeconomics 9506002, EconWPA.
- Dreze, Jacques H. & Modigliani, Franco, 1972. "Consumption decisions under uncertainty," Journal of Economic Theory, Elsevier, vol. 5(3), pages 308-335, December.
- 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.
- S. Rao Aiyagari, 1993.
"Uninsured idiosyncratic risk and aggregate saving,"
502, Federal Reserve Bank of Minneapolis.
- 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.
- 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.
- Hansen, G.D. & Imrohoroglu, A., 1990. "The Role Of Unemployment Insurance In An Economy With Liquidity Constraints And Moral Hazard," Papers 21, California Los Angeles - Applied Econometrics.
- Hopenhayn, H. & Nicolini, P.J., 1996.
"Optimal Unemployment Insurance,"
RCER Working Papers
421, University of Rochester - Center for Economic Research (RCER).
- Lars Ljungqvist & Thomas Sargent, 1999. "Matlab code for Hopenhayn-Nicolini's optimal unemployment insurance model," QM&RBC Codes 18, Quantitative Macroeconomics & Real Business Cycles.
- 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.
- 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.
- 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.
- Burda, Michael & Wyplosz, Charles, 1994.
"Gross worker and job flows in Europe,"
European Economic Review,
Elsevier, vol. 38(6), pages 1287-1315, June.
- Burkhard Heer & Ludger Linnemann, . "Procyclical Labor Productivity: Sources and Implications," Computing in Economics and Finance 1997 178, Society for Computational Economics.
- Fredriksson, P. & Holmlund, B., 1998.
"Optimal Unemployment Insurance in Search Equilibrium,"
1998-2, Uppsala - Working Paper Series.
- 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, Peter & Holmlund, Bertil, 1998. "Optimal Unemployment Insurance in Search Equilibrium," Working Paper Series 1998:2, Uppsala University, Department of Economics.
- 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.
- 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.
- 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.
- 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.
- Fehr, Hans, 1997. "Belastungswirkungen der aktuellen Reformvorschläge zur Einkommensbesteuerung und zur Alterssicherung," Tübinger Diskussionsbeiträge 101, University of Tübingen, School of Business and Economics.
- James Costain, 1997. "Unemployment insurance with endogenous search intensity and precautionary saving," Economics Working Papers 243, Department of Economics and Business, Universitat Pompeu Fabra.
- Cahuc, Pierre & Lehmann, Etienne, 1999. "Should unemployment benefits decrease with unemployment spell ?," CEPREMAP Working Papers (Couverture Orange) 9916, CEPREMAP.
- 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.
- 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.
- 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.
- 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.
- Broer, Peter D. & Lassila, Jukka, . "Pension Policies and Public Debt in Dynamic CGE Models," ETLA A, The Research Institute of the Finnish Economy, number 23.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_297. 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: (Julio Saavedra)
If references are entirely missing, you can add them using this form.