 Active and Passive Policies Against Poverty with Decreasing EmployabilityDalit Contini and Matteo Richiardi No 49, LABORatorio R. Revelli Working Papers Series from LABORatorio R. Revelli, Centre for Employment Studies Abstract: In this paper we propose a non-equilibrium model in order to explain the search behavior of unemployed workers. This modeling strategy, framed in a rational choice paradigm, allows us to investigate the effects of negative duration dependence in the out-of-unemployment hazard rate, accounting for a decrease in employability as the unemployment spell lengthens. We show that individuals react to an expected reduction in their search effectiveness by increasing their search efforts. We then analyze active and passive labor market policies, consisting in training programs and income support schemes. We show that it is optimal for the government to include among the eligibility criteria for subsidized training a minimum length of the unemployment spell. However, it is optimal to recruit workers before they become discouraged and stop searching. We also show that for a broad range of the parameters the optimal income support scheme takes the form of unemployment benefits granted for a limited amount of time starting from the beginning of the unemployment spell, coupled with social assistance for long-term unemployed with very limited residual employability. Pages: 21 pages Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cca:wplabo:49 Access Statistics for this paper More papers in LABORatorio R. Revelli Working Papers Series from LABORatorio R. Revelli, Centre for Employment Studies Contact information at EDIRC. |
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