Unemployment Benefits and Unemployment Rates of Low-Skilled and Elder Workers in West Germany: A Search Equilibrium Approach

Andrey Launov (), Joachim Wolff () and Stephan Klasen
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Andrey Launov: University of Kent
Joachim Wolff: Institute for Employment Research (IAB), Nuremberg

No 1161, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we investigate whether the extension of the entitlement to unemployment benefits in the mid 80s can explain the increase in the unemployment rates of unskilled and elder workers in western Germany. To answer this question we estimate a version of the Burdett-Mortensen search equilibrium model and analyze how workers’ search behaviour responded to these reforms. We try both nonparametric and fully-parametric estimation methods and identify the cases in which the nonparametric approach cannot be applied. We find that the entitlement reforms are largely responsible for the increase of unemployment among unskilled workers.

Keywords: search equilibrium; unemployment benefit; parametric estimation; Germany (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2004-05
New Economics Papers: this item is included in nep-eec and nep-lab
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Citations: View citations in EconPapers (1)

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