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In-Work Benefits and Unemployment

Author

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  • Tonin, Mirco

    () (Free University of Bozen/Bolzano)

  • Kolm, Ann-Sofie

    () (Stockholm University)

Abstract

In-work benefits are becoming an increasingly relevant labour market policy, gradually expanding in scope and geographical coverage. This paper investigates the equilibrium impact of in-work benefits and contrasts it with the traditional partial equilibrium analysis. We find under which conditions accounting for equilibrium wage adjustments amplifies the impact of in-work benefits on search intensity, participation, employment, and unemployment, compared to a framework in which wages are fixed. We also account for the financing of these benefits and determine the level of benefits necessary to achieve efficiency in a labour market characterized by search externalities.

Suggested Citation

  • Tonin, Mirco & Kolm, Ann-Sofie, 2011. "In-Work Benefits and Unemployment," IZA Discussion Papers 5473, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp5473
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    References listed on IDEAS

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    11. repec:pri:cepsud:165rothstein is not listed on IDEAS
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    Cited by:

    1. Ann-Sofie Kolm & Mirco Tonin, 2012. "In-Work Benefits and the Nordic Model," CEU Working Papers 2013_1, Department of Economics, Central European University, revised 14 Dec 2012.
    2. Kolm, Ann-Sofie & Tonin, Mirco, 2015. "Benefits conditional on work and the Nordic model," Journal of Public Economics, Elsevier, vol. 127(C), pages 115-126.
    3. Edmark, Karin & Liang, Che-Yuan & Mörk, Eva & Selin, Håkan, 2012. "Evaluation of the Swedish earned income tax credit," Working Paper Series, Center for Fiscal Studies 2012:2, Uppsala University, Department of Economics.
    4. Gabriela Galassi, 2021. "Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform," Staff Working Papers 21-15, Bank of Canada.
    5. Laun, Lisa, 2019. "In-work benefits across Europe," Working Paper Series 2019:16, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Galassi, Gabriela, 2021. "Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform," IZA Discussion Papers 14248, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    search; in-work benefits; labour force participation; wage adjustment;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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