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Staying on the Dole

Author Info

Listed author(s):
  • Strulik, Holger
  • Tyran, Jean-Robert
  • Vanin, Paolo

Abstract

We develop a simple model of short- and long-term unemployment to study how labour market institutions interact with labour market conditions and personal characteristics of the unemployed. We analyze how the decision to exit unemployment and to mitigate human capital degradation by retraining depends on education, skill degradation, age, labour market tightness, taxes, unemployment insurance benefits and welfare assistance. We extend our analysis by allowing for time-inconsistent choices and demonstrate the possibility of an unemployment trap.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5967.

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Date of creation: Nov 2006
Handle: RePEc:cpr:ceprdp:5967
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Keywords: present-biased preferences; retraining; skill degradation; unemployment; unemployment benefits; welfare assistance;

Other versions of this item:

Find related papers by JEL classification:
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
  • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
  • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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