Labor participation externalities and unemployment

Chia-Hui Lu

Economics Bulletin, 2020, vol. 40, issue 2, 1002-1010

Abstract: Introducing labor participation externalities into a standard search model, this paper investigates the impact of such externalities and the reform of unemployment compensation on macroeconomic performance. This paper finds that keeping up with the Joneses behavior on labor participation accompanying the reduction in unemployment benefits can decrease the unemployment rate and increase the labor participation rate.

Keywords: Keeping up with the Joneses; unemployment; search and matching (search for similar items in EconPapers)
JEL-codes: E2 J6 (search for similar items in EconPapers)
Date: 2020-04-15
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