Optimal Employment Subsidies to Heterogeneous Workers: Unemployment-Trap, Job-Additionality and Tax Rates

Pierre Picard

Annals of Economics and Statistics, 2001, issue 62, 97-125

Abstract: Unemployment and welfare benefits generate unemployment traps. In this paper, we design the optimal employment subsidies that allow governments to reduce unemployment traps under constant budget deficit and without diminishing workers' welfare. We explore the effects of work incentives on the shape and on the properties of employment subsidies. We finally address the issues of self-help effect and job-additionality.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2001:i:62:p:97-125

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