Labor force participation, job search effort and unemployment insurance in the laboratory

Wolfgang Lechthaler and Patrick Ring

Journal of Economic Behavior & Organization, 2021, vol. 189, issue C, 748-778

Abstract: How the provision of unemployment benefits affects employment is a debated issue. We aim at complementing theoretical and empirical contributions to this debate with a laboratory experiment. We simulate a job market with search effort and labor force participation decisions while varying the maximum length of unemployment benefit eligibility. Our results reveal two separable, opposing effects. Individuals within the labor force search with lower effort when unemployment benefits are more generous. However, individuals are more likely to participate in the labor force and to actively search for a job.

Keywords: Job search; Employment; Labor force participation; Unemployment insurance; Economic recession; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: E70 J21 J65 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:189:y:2021:i:c:p:748-778

DOI: 10.1016/j.jebo.2021.06.048

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