Optimal Unemployment Benefit Policy and the Firm Productivity Distribution
Published By: Institute for the Study of Labor (IZA) | Published Date: May, 01 , 2016This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral hazard or consumption-smoothing considerations. It considers a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a declining time profile of benefits, the government can affect the equilibrium wage profile in a manner that enhances the sorting of workers across low- and high productivity firms. It demonstrates that optimal government policy depends on the dispersion
and skewness of the firms’ productivity distribution.
Author(s): Tomer Blumkin, Leif Danziger, Eran Yashiv | Posted on: Jun 15, 2016 | Views() | Download (194)