How to Finance Unemployment Benefits in an Economy with Search Generated Equilibrium Unemployment

Pia Weiss ()

Public Economics from EconWPA

Abstract: In this paper, the effects of alternatives to finance unemployment benefits on employment and wages are examined in a model with search generated equilibrium unemployment. It is demonstrated that employment improves if a value--added tax is levied, as opposed to a social system contribution, where employees bear part of the contribution. In addition, it is shown that shifting the burden of the contribution to the Social Security system from employers to employees may have negative employment effects if the benefits are not taxed. This effect vanishes if the benefits are taxed.

Keywords: job search; unemployment; taxes (search for similar items in EconPapers)
JEL-codes: H24 H55 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2001-03-15
Note: Type of Document - Adobe PDF; prepared on IBM PC - LaTeX; to print on HP; pages: 21 ; figures: included
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:0103001

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