Search and Work in Optimal Welfare Programs
Some existing welfare programs (“work-first”) require participants to work in exchange for benefits. Others (“job search-first”) emphasize private job-search and provide assistance in finding and retaining a durable employment. This paper studies the optimal design of welfare programs when (i) the principal/government is unable to observe the agent’s effort, but can assist the agent’s job search and can mandate the agent to work, and (ii) agents’ skills depreciate during unemployment. In the optimal welfare program, assisted search is implemented between an initial spell of private search (unemployment insurance) and a final spell of pure income support where search effort is not elicited. To be effective, job-search assistance requires large reemployment subsidies. The optimal program features compulsory work activities for low levels of program’s generosity (i.e., its promised utility or available budget). The threat of mandatory work acts like a punishment that facilitates the provision of search incentives without compromising consumption smoothing too much.
|Date of creation:||Mar 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
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.:
- Hausman, Jerry A., 1980.
"The effect of wages, taxes, and fixed costs on women's labor force participation,"
Journal of Public Economics,
Elsevier, vol. 14(2), pages 161-194, October.
- Jerry A. Hausman, 1980. "The effect of wages, taxes, and fixed costs on women's labor force participation," NBER Chapters, in: Econometric Studies in Public Finance, pages 161-194 National Bureau of Economic Research, Inc.
- J. Hausman, 1979. "The Effect of Wages, Taxes and Fixed Costs on Women's Labor Force Participation," Working papers 238, Massachusetts Institute of Technology (MIT), Department of Economics.
- Setty, Ofer, 2009.
"Optimal Unemployment Insurance with Monitoring,"
18188, University Library of Munich, Germany.
- Robert Shimer & Ivan Werning, 2005.
"Liquidity and Insurance for the Unemployed,"
NBER Working Papers
11689, National Bureau of Economic Research, Inc.
- Nicola Pavoni & Giovanni L. Violante, 2005.
"Optimal welfare-to-work programs,"
Discussion Paper / Institute for Empirical Macroeconomics
143, Federal Reserve Bank of Minneapolis.
- Ashenfelter, Orley & Ashmore, David & Deschenes, Olivier, 2005.
"Do unemployment insurance recipients actively seek work? Evidence from randomized trials in four U.S. States,"
Journal of Econometrics,
Elsevier, vol. 125(1-2), pages 53-75.
- Ashenfelter, Orley & Ashmore, David & Deschenes, Olivier, 2000. "Do Unemployment Insurance Recipients Actively Seek Work? Evidence From Randomized Trials in Four U.S. States," IZA Discussion Papers 128, Institute for the Study of Labor (IZA).
- repec:adr:anecst:y:2008:i:91-92:p:17 is not listed on IDEAS
- 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.
- 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.
- Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-77, October.
- Bruce C. Fallick, 1996. "A Review of the Recent Empirical Literature on Displaced Workers," ILR Review, Cornell University, ILR School, vol. 50(1), pages 5-16, October.
- Christopher J. Flinn, 1986. "Econometric Analysis of CPS-Type Unemployment Data," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 456-484.
- Alan B. Krueger & Andreas Mueller, 2008.
"Job Search and Unemployment Insurance: New Evidence from Time Use Data,"
1093, Princeton University, Department of Economics, Center for Economic Policy Studies..
- Krueger, Alan B. & Mueller, Andreas, 2010. "Job search and unemployment insurance: New evidence from time use data," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 298-307, April.
- Krueger, Alan B. & Mueller, Andreas I., 2008. "Job Search and Unemployment Insurance: New Evidence from Time Use Data," IZA Discussion Papers 3667, Institute for the Study of Labor (IZA).
- repec:mpr:mprres:2922 is not listed on IDEAS
- Nicola Pavoni, 2009. "Optimal Unemployment Insurance, With Human Capital Depreciation, And Duration Dependence," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 323-362, 05.
- Christopher Phelan & Ennio Stacchetti, 2001.
"Sequential Equilibria in a Ramsey Tax Model,"
Econometric Society, vol. 69(6), pages 1491-1518, November.
- Zvi Eckstein & Kenneth I. Wolpin, 1989. "Dynamic Labour Force Participation of Married Women and Endogenous Work Experience," Review of Economic Studies, Oxford University Press, vol. 56(3), pages 375-390.
- Bruce D. Meyer, 1995. "Lessons from the U.S. Unemployment Insurance Experiments," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 91-131, March.
- Addison, John T & Portugal, Pedro, 1989. "Job Displacement, Relative Wage Changes, and Duration of Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 281-302, July.
- Cogan, John F, 1981. "Fixed Costs and Labor Supply," Econometrica, Econometric Society, vol. 49(4), pages 945-63, June.
- repec:mpr:mprres:3230 is not listed on IDEAS
- Keane, Michael P & Wolpin, Kenneth I, 1997.
"The Career Decisions of Young Men,"
Journal of Political Economy,
University of Chicago Press, vol. 105(3), pages 473-522, June.
- Stephen E. Spear & Sanjay Srivastava, 1987. "On Repeated Moral Hazard with Discounting," Review of Economic Studies, Oxford University Press, vol. 54(4), pages 599-617.
- repec:mpr:mprres:3224 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:9389. 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: ()
If references are entirely missing, you can add them using this form.