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Staying on the Dole

Author

Listed:
  • 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.

Suggested Citation

  • Strulik, Holger & Tyran, Jean-Robert & Vanin, Paolo, 2006. "Staying on the Dole," CEPR Discussion Papers 5967, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5967
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    More about this item

    Keywords

    present-biased preferences; retraining; skill degradation; unemployment; unemployment benefits; welfare assistance;
    All these keywords.

    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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