Time Limits in a Two-tier Unemployment Benefit Scheme under Involuntary Unemployment

Christian Ludwig Holzner, Volker Meier () and Martin Werding ()

No Ifo Working Papers No. 29, Ifo Working Paper Series from Ifo Institute for Economic Research at the University of Munich

Abstract: The consequences of introducing or tightening time limits on receiving high unemploymentbenefits are studied in a shirking model. Stricter time limits have an ambiguousimpact on the net wage, and changes of utility levels of employed workers and recipientsof high unemployment benefits have the same sign as the variation in the netwage. The utility differential between the two groups of unemployed shrinks. The relativeincome position of skilled workers moves in the same direction as the net wage ofunskilled workers. When access to high benefits is denied for caught shirkers, strictertime limits may decrease employment.

Keywords: Unemployment benefits; welfare benefits; time limits; efficiency wages. (search for similar items in EconPapers)
JEL-codes: H53 J41 J60 (search for similar items in EconPapers)
Date: 2006
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Journal Article: Time Limits in a Two-tier Unemployment Benefit Scheme under Involuntary Unemployment (2010)
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