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Job Qualities, Search Unemployment, and Public Policy

Author

Listed:
  • Jian Xin Heng

    (Yale University)

  • Benoit Julien

    (UNSW Australia)

  • John Kennes

    (Aarhus University)

  • Ian King

    () (School of Economics, University of Queensland)

Abstract

We analyse the impact of public policy on unemployment and the qualities of jobs created in an economy with directed search frictions. Policy variables include unemployment benefits, job creation subsidies, and a graduated income tax structure with a government budget constraint. Firms choose to create either high or low quality jobs and bid for labor. We find, among other things, that neither the upper tax threshold nor the upper tax rate affect the mix of job qualities or unemployment, and that, while subsidies to high quality jobs affect the mix of job types, they have no effect on unemployment. We also identify a policy configuration that allows for the simultaneous existence of constrained efficiency, ex post equity, and a balanced government budget.

Suggested Citation

  • Jian Xin Heng & Benoit Julien & John Kennes & Ian King, 2016. "Job Qualities, Search Unemployment, and Public Policy," Discussion Papers Series 570, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uq2004:570
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    File URL: http://www.uq.edu.au/economics/abstract/570.pdf
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    References listed on IDEAS

    as
    1. Athanasios Geromichalos, 2015. "Unemployment Insurance and Optimal Taxation in a Search Model of the Labor Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(2), pages 365-380, April.
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    5. Benoît Julien & John Kennes & Ian King & Sephorah Mangin, 2009. "Directed search, unemployment and public policy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(3), pages 956-983, August.
    6. Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
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    More about this item

    Keywords

    Directed search; job heterogeneity; public policy;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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