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Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance

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  • and Bertil Holmlund, Susanne Ek

    (Department of Economics)

Abstract

The paper develops an equilibrium search and matching model where two-person families as well as singles participate in the labor market. We show that equilibrium entails wage dispersion among equally productive risk-averse workers. Marital status as well as spousal labor market status matter for wage outcomes. In general, employed members of two-person families receive higher wages than employed singles. The model is applied to a welfare analysis of alternative unemployment insurance systems, recognizing the role of spousal employment as partial substitute for public insurance. The optimal system involves benefit differentiation based on marital status as wellas spousal labor market status. Optimal differentiation yields small welfare gains but gives rise to large wage differentials.

Suggested Citation

  • and Bertil Holmlund, Susanne Ek, 2010. "Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance," Working Paper Series 2010:2, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2010_002
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    Cited by:

    1. Zaharieva, Anna, 2013. "Social welfare and wage inequality in search equilibrium with personal contacts," Labour Economics, Elsevier, vol. 23(C), pages 107-121.
    2. Valladares-Esteban, Arnau & Choi, Sekyu, 2016. "On households and unemployment insurance," Discussion Paper Series In Economics And Econometrics 1508, Economics Division, School of Social Sciences, University of Southampton.
    3. Zaharieva, Anna, 2015. "Social contacts and referrals in a labor market with on-the-job search," Labour Economics, Elsevier, vol. 32(C), pages 27-43.
    4. Ek Susanne & Holmlund Bertil, 2010. "Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-27, May.
    5. Forslund, Anders & Fredriksson, Peter, 2009. "Income support systems, labour supply incentives and employment – some cross-country evidence," Working Paper Series 2009:32, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. J. Ignacio García‐Pérez & Sílvio Rendon, 2020. "Family job search and wealth: The added worker effect revisited," Quantitative Economics, Econometric Society, vol. 11(4), pages 1431-1459, November.
    7. Damdinsuren, Erdenebulgan & Mitkova, Mariya & Zaharieva, Anna, 2024. "Parental networks, wage expectations, and the intergenerational educational mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 218(C), pages 146-175.
    8. Björn Nilsson, 2019. "The School-to-Work Transition in Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 55(5), pages 745-764, May.
    9. Malmberg, Jonas, 2010. "Posting Post Laval International and National Responses," Working Paper Series, Center for Labor Studies 2010:5, Uppsala University, Department of Economics.
    10. Mauring, Eeva, 2016. "A two-agent model of sequential search and choice," Journal of Economic Behavior & Organization, Elsevier, vol. 123(C), pages 122-137.
    11. Valladares-Esteban, Arnau & Choi, Sekyu, 2016. "The marriage unemployment gap," Discussion Paper Series In Economics And Econometrics 1509, Economics Division, School of Social Sciences, University of Southampton.
    12. Sekyu Choi, 2013. "On Households and Unemployment," 2013 Meeting Papers 992, Society for Economic Dynamics.
    13. Joanna Venator, 2022. "Dual-Earner Migration Decisions, Earnings, and Unemployment Insurance," Boston College Working Papers in Economics 1052, Boston College Department of Economics.

    More about this item

    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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