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Unemployment Benefits and Unemployment Rates of Low-Skilled and Old Workers in West Germany: A Search Equilibrium Approach

Author

Listed:
  • Joachim Wolff
  • Andrey Launov

Abstract

In this paper we ask a question whether a prolonging of entitlement to unemployment benefits that happened in the mid 80s can explain the unusual increase in unemployment rates of unskilled and old workers. To answer this question we estimate a version of Burdett-Mortensen model of search equilibrium and analyze how reservation wages and search intensities responded to benefit reforms. We try both nonparametric and fully-parametric estimation methods and discover the cases in which the first one can not be applicable. We find that the entitlement reforms are in big part responsible for the increase of unemployment among unskilled workers

Suggested Citation

  • Joachim Wolff & Andrey Launov, 2004. "Unemployment Benefits and Unemployment Rates of Low-Skilled and Old Workers in West Germany: A Search Equilibrium Approach," 2004 Meeting Papers 395, Society for Economic Dynamics.
  • Handle: RePEc:red:sed004:395
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    File URL: http://www.vwl.uni-muenchen.de/ls_empwi/Forschung/dokumente/forschung/launov/wp04.pdf
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    Cited by:

    1. Giovanni Sulis, 2008. "Wage Dispersion and Equilibrium Search Models: Some Evidence from Italy," LABOUR, CEIS, vol. 22(4), pages 593-627, December.

    More about this item

    Keywords

    search equilibrium; unempoyment benefits; parametric estimation;

    JEL classification:

    • 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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