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Optimal unemployment benefit policy and the firm productivity distribution

Tomer Blumkin, Leif Danziger () and Eran Yashiv
Additional contact information
Tomer Blumkin: Ben-Gurion University
Eran Yashiv: IZA

International Tax and Public Finance, 2017, vol. 24, issue 1, 36-59

Abstract: Abstract This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral-hazard or consumption-smoothing considerations. We consider 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. We demonstrate that optimal government policy depends on the dispersion and skewness of the firms’ productivity distribution.

Keywords: Unemployment benefit policy; Declining unemployment benefits; Productivity distribution; Skewness; Dispersion (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Optimal Unemployment Benefit Policy and the Firm Productivity Distribution (2016) Downloads
Working Paper: Optimal Unemployment Benefit Policy and the Firm Productivity Distribution (2016) Downloads
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