A Macro Theory of Employment Vouchers

Mike Orszag and Dennis Snower

No 1367, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper explores the optimal design of subsidies for hiring unemployed workers (‘employment vouchers’ for short) in the context of a simple macroeconomic model of the labour market. Focusing on the short-term and long-term effects of the vouchers on employment and unemployment, the analysis shows how the optimal policy depends on the rates of hiring and firing, and on the problems of displacement and deadweight. It also examines the roles of the government budget constraint and of the level of unemployment benefits in optimal policy design.

Keywords: Employment Policy; Government Budget Constraint; Unemployment Benefits (search for similar items in EconPapers)
JEL-codes: J23 J24 J31 J32 J64 (search for similar items in EconPapers)
Date: 1996-03
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Citations: View citations in EconPapers (4)

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Working Paper: A Macro Theory of Employment Vouchers (1996)
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