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Pareto - Improving Unemployment Policies

  • Wälde, Klaus
  • Lingens, Jörg

We investigate how continental European unemployment can be reduced without reducing unemployment benefits and without reducing the net income of low-wage earners. Lower unemployment replacement rates reduce unemployment, the net wage and unemployment benefits. A lower tax on labour increases net wages and - for certain benefit-systems - unemployment benefits as well. Combining these two policies allows to reduce unemployment in countries with "net-Bismarck" and Beveridge systems without reducing net income of workers or the unemployed. Such a policy becomes self-financing under realistic parameter constellations when taxes are reduced only for low-income workers.

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Paper provided by University of Würzburg, Chair for Monetary Policy and International Economics in its series W.E.P. - Würzburg Economic Papers with number 63.

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Date of creation: 2005
Handle: RePEc:zbw:wuewep:63
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