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Optimal Unemployment Benefit Policy and the Firm Productivity Distribution

Tomer Blumkin (), Leif Danziger () and Eran Yashiv ()
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Tomer Blumkin: Ben Gurion University

No 9967, IZA Discussion Papers from Institute for the Study of Labor (IZA)

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.

JEL-codes: J64 J65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
Date: 2016-05
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Related works:
Journal Article: Optimal unemployment benefit policy and the firm productivity distribution (2017) Downloads
Working Paper: Optimal Unemployment Benefit Policy and the Firm Productivity Distribution (2016) Downloads
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