The Simple Economics of Benefit Transfers

Dennis Snower

No 1086, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper examines the employment and unemployment implications of permitting unemployed people to use part of their unemployment benefits to provide employment vouchers to the firms that hire them. This opportunity to transfer unemployment benefits, `benefit transfers', would help replace the unemployment trap by providing an incentive to seek and provide jobs. The vouchers rise with people's unemployment durations and with the amount of training provided to them by the hiring firm. The policy would be costless to the government since the cost of the employment vouchers is set equal to the amount saved on unemployment benefits. It would not be inflationary since the long-term unemployed, on whom the vouchers are targeted, have little influence on wage setting.

Keywords: Employment Creation; Employment Vouchers; Unemployment; Unemployment Benefits (search for similar items in EconPapers)
JEL-codes: J23 J24 J31 J32 J64 (search for similar items in EconPapers)
Date: 1994-11
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Citations: View citations in EconPapers (10)

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