How Imperfect Competition in the Labor Market Affects Long-Term Unemployment Policies ?

Xavier Wauthy and Yves Zenou

No 1996015, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We consider a continuum of unemployed workers ranked according to their unemployment duration. There are two industries, a high and a low technology one, which compete imperfectly on the labor market. Once employed, each individual must bear a training cost, which is proportional to his unemployment duration, the training cost being larger in the high technology industry. There is a duration dependence since the long-term unemployed may never find a job. In this framework, we study different types of second best policies that either subsidy the training cost or the wages and we compared them.

Keywords: Duration dependence; Nash equilibrium in wages; second best policies; specific versus non-specific policies (search for similar items in EconPapers)
Date: 1996-04-01
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