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Heterogeneous Labor Markets and the Generosity Towards the Unemployed: An International Perspective

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Abstract

In this paper, we investigate whether the different distributions of European, Canadian and US labor forces may explain their differences in unemployment insurance generosity and attitude towards moral hazard. We do so within a dynamic general equilibrium model with indivisible labor and borrowing constraints. Agents differ in their educational attainment, which translates into country-specific differences in the probabilities of finding a job as well as income prospects. We parametrize the model to a set of European countries, Canada and the United States. We then ask citizens to vote on an unemployment insurance program given a certain level of moral hazard. Les différences dans la distribution des forces de travail en Europe, au Canada et aux USA peuvent-elles expliquer les différences de générosité de l'assurance chômage et d'attitudes vis-à-vis du risque moral? Nous répondons à cette question dans un modèle d'équilibre général dynamique avec indivisibilité du travail et contraintes de liquidités. Les agents diffèrent selon leur niveau d'éducation, ce qui se traduit par des différences dans la probabilité d'emploi et dans le salaire espéré. Nous paramétrisons le modèle pour un ensemble de pays européens, le Canada et les Etats Unis, et demandons aux citoyens de ces pays de se prononcer sur la générosité de l'assurance chômage par vote.

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  • Stephane Pallage & Christian Zimmermann, 1999. "Heterogeneous Labor Markets and the Generosity Towards the Unemployed: An International Perspective," Cahiers de recherche CREFE / CREFE Working Papers 88, CREFE, Université du Québec à Montréal.
  • Handle: RePEc:cre:crefwp:88
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    Cited by:

    1. Alice Fabre & Stéphane Pallage & Christian Zimmermann, 2014. "Universal Basic Income versus Unemployment Insurance," Cahiers de recherche 1427, CIRPEE.
    2. Fabre, Alice & Pallage, Stéphane, 2015. "Child labor, idiosyncratic shocks, and social policy," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 394-411.
    3. Stéphane Pallage & Christian Zimmermann, 2006. "On voters’ attitudes towards unemployment insurance subsidies across regions: a Canadian simulation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 391-410, June.
    4. Lotti, Lorenzo, 2020. "Generosity during Covid-19 the effect of social distancing and framing on donations in dictator games," MPRA Paper 102144, University Library of Munich, Germany.
    5. Pallage, Stéphane & Scruggs, Lyle & Zimmermann, Christian, 2013. "Measuring Unemployment Insurance Generosity," Political Analysis, Cambridge University Press, vol. 21(4), pages 524-549.
    6. 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.
    7. Lotti, Lorenzo, 2020. "Generosity during Covid-19 the effect of social distancing and framing on donations in dictator games," MPRA Paper 103826, University Library of Munich, Germany.
    8. Temel Taskin, 2010. "Unemployment Insurance and Home Production," 2010 Meeting Papers 93, Society for Economic Dynamics.
    9. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 1998. "Equilibrium unemployment insurance," Economics Working Papers 605, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 1999.
    10. Pollak, Andreas, 2013. "Employment Insurance and the Business Cycle," MPRA Paper 49358, University Library of Munich, Germany.
    11. Pollak, Andreas, 2007. "Optimal unemployment insurance with heterogeneous agents," European Economic Review, Elsevier, vol. 51(8), pages 2029-2053, November.

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    More about this item

    Keywords

    Heterogeneous agents; unemployment insurance; voting;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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