Employment Subsidies and Substitutable Skills: An Equilibrium Matching Approach

Gabriele Cardullo and Bruno Van der Linden

Applied Economics Quarterly (formerly: Konjunkturpolitik), 2007, vol. 53, issue 4, 375-404

Abstract: The search-matching model is well suited for an equilibrium evaluation of labor market policies. When those policies are targeted on some groups, the usual juxtaposition of labor markets is however a shortcoming. There is a need for a setting where workers' productivity depends on employment levels in all markets. This paper provides such a theoretical setting. We first develop a streamlined model and then show that it can be extended to deal with interactions among various labor market and fiscal policies. Simulation results focus on the effects of employment susbsidies and in-work benefits and on their internactions with the profile of unemployment benefits and with active labor market programs.

Keywords: search-matching equilibrium; reductions of social security contributions; labor market programs (search for similar items in EconPapers)
JEL-codes: E24 H2 J68 (search for similar items in EconPapers)
Date: 2007
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Related works:
Working Paper: Employment subsidies and substitutable skills: An equilibrium matching approach (2006)
Working Paper: Employment Subsidies and Substitutable Skills: An Equilibrium Matching Approach (2006)
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