An Equilibrium Model of Search Unemployment
James Albrecht () and
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Bo Axell: Research Institute of Industrial Economics (IFN)
No 99, Working Paper Series from Research Institute of Industrial Economics
This paper develops a simple general equilibrium model with sequential search in which a non-degenerate wage offer distribution is endogenously determined. We use this model to analyze the comparative statics effects of increases in unemployment compensation on the unemployment rate and aggregate welfare taking into account the induced change in the wage offer distribution. Our results differ significantly from the predictions of the standard "partial-partial" model. For example, one can expect a selective increase in unemployment compensation, made available to those who impute a relatively low value to leisure, to decrease the equilibriumum rate of unemployment.
Keywords: General equilibrium; unemployment; Subsidies; Wage; Mobility (search for similar items in EconPapers)
JEL-codes: E24 H20 J60 (search for similar items in EconPapers)
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Journal Article: An Equilibrium Model of Search Unemployment (1984)
Working Paper: An Equilibrium Model of Search Unemployment (1983)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0099
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