Monitoring Job Search Effort with Hyperbolic Time Preferences and Non-Compliance: A Welfare Analysis

Bart Cockx, Corinna Ghirelli and Bruno Van der Linden

No 2013006, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper develops a partial equilibrium job search model to study the behavioral and welfare implications of an Unemployment Insurance (UI) scheme in which job search requirements are imposed on UI recipients with hyperbolic preferences. We show that, if the search requirements are well chosen, a perfect monitoring scheme can in principle increase the job finding rate and, contrary to what happens with exponential discounting, it can raise the expected lifetime utility of the current and future selves of sophisticated hyperbolic discounters. The same holds for naïve agents if the welfare criterion ignores their misperception problem. In sum, introducing a perfect monitoring scheme can be a Pareto improvement. However, if claimants have the opportunity to withdraw from the UI scheme, their long-run utility can even be lower than in the absence of job search requirements. Imperfections in the measurement of job-search effort further reduce the chances that monitoring raises the welfare of the unemployed.

Keywords: job search model; job search monitoring; non-compliance; hyperbolic discounting; social efficiency (search for similar items in EconPapers)
JEL-codes: D60 D90 J64 J65 J68 (search for similar items in EconPapers)
Pages: 42
Date: 2013-03-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://sites.uclouvain.be/econ/DP/IRES/2013006.pdf (application/pdf)

Related works:
Working Paper: Monitoring Job Search Effort with Hyperbolic Time Preferences and Non-Compliance: A Welfare Analysis (2013)
Working Paper: Monitoring Job Search Effort with Hyperbolic Time Preferences and Non-Compliance: A Welfare Analysis (2013)
Working Paper: Monitoring Job Search Effort with Hyperbolic Time Preferences and Non-Compliance: A Welfare Analysis (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2013006

Access Statistics for this paper

More papers in LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Virginie LEBLANC ().