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Equilibrium Search with Time-Varying Unemployment Benefits

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  • James Albrecht
  • Susan Vroman

Abstract

In this paper, we show how time-varying unemployment benefits can generate equilibrium wage dispersion in an economy in which identical firms post wages and homogeneous workers search for acceptable offers. We allow for matching frictions and for free entry and exit of vacancies, and we model time-varying unemployment benefits in a simple and natural way. We characterize the equilibrium, and we derive the comparative statics effects of changes in the unemployment compensation system on the equilibrium wage distribution and the unemployment rate.

Suggested Citation

  • James Albrecht & Susan Vroman, 2001. "Equilibrium Search with Time-Varying Unemployment Benefits," CESifo Working Paper Series 487, CESifo.
  • Handle: RePEc:ces:ceswps:_487
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    References listed on IDEAS

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    1. Fredriksson, Peter & Holmlund, Bertil, 2001. "Optimal Unemployment Insurance in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 370-399, April.
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