In-Work Benefits in Search Equilibrium

Ann-Sofie Kolm () and Mirco Tonin ()

No 2006:12, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: We study the general equilibrium effects of in-work beneifts in a search framework. Introducing in-work benefits reduces equilibrium unemployment, moderate wages, and boost participation and search. Total employment increases as a result. Considering in-work benefits in a general equilibrium setting reveals that employment increases mainly though the impact on job creation. This is in contrast to what is usually stressed, namely that employment increases because individuals are provided with incentives to take a job.

Keywords: In-work benefits; unemployment; participation (search for similar items in EconPapers)
JEL-codes: J21 J38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-lab
Date: 2006-12-21
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