Staying on the Dole

Holger Strulik (), Jean-Robert Tyran () and Paolo Vanini ()

No 5967, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a simple model of short- and long-term unemployment to study how labour market institutions interact with labour market conditions and personal characteristics of the unemployed. We analyze how the decision to exit unemployment and to mitigate human capital degradation by retraining depends on education, skill degradation, age, labour market tightness, taxes, unemployment insurance benefits and welfare assistance. We extend our analysis by allowing for time-inconsistent choices and demonstrate the possibility of an unemployment trap.

Keywords: present-biased preferences; retraining; skill degradation; unemployment; unemployment benefits; welfare assistance (search for similar items in EconPapers)
JEL-codes: J31 J38 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hrm, nep-ias and nep-lab
Date: 2006-11
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Working Paper: Staying on the Dole (2006)
Working Paper: Staying on the Dole (2007)
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