Temporary Layoffs and Unemployment Insurance: Is Experience Rating Desirable?

Julia Fath and Clemens Fuest

German Economic Review, 2005, vol. 6, issue 4, 471-483

Abstract: Abstract. This paper explores how the introduction of an experience‐rated system of unemployment insurance affects employment and welfare in a model where implicit contracts between firms and workers give rise to wage rigidities and unemployment. In the literature, it has been argued that experience‐rated systems of unemployment insurance may reduce long‐term employment as firms anticipate the higher costs of layoffs implied by experience rating. Our analysis shows that the introduction of experience rating may increase or decrease long‐term employment but it unambiguously raises welfare.

Date: 2005
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https://doi.org/10.1111/j.1468-0475.2005.00142.x

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Journal Article: Temporary Layoffs and Unemployment Insurance: Is Experience Rating Desirable? (2005)
Working Paper: Temporary Layoffs and Unemployment Insurance: Is Experience Rating Desirable? (2002)
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German Economic Review is currently edited by Bernhard Felderer, Joseph F. Francois, Ivo Welch, Urs Schweizer and David E. Wildasin

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