Bismarck versus Beveridge: Which Unemployment Compensation System is More Prone to Labor Market Shocks?

Thomas Beissinger () and Oliver Buesse
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Oliver Buesse: University of Regensburg

No 358, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Based on a model with imperfectly competitive labor and product markets the real consequences of labor market shocks for economies with either an earnings-related or flat-rate unemployment compensation system are considered. A distinctive feature of the analysis is the comparison of both unemployment compensation systems in a two-country setting. It is demonstrated that the performance of a system with earnings-related or flat-rate unemployment benefits depends on whether the labor market shock is provoked in the home country or originates from abroad. We also point out how our results extend to two-tier unemployment compensation systems which differ with respect to the relative importance of earnings-related and flat-rate benefits.

Keywords: monopolistic competition; Earnings-related benefits; flat-rate benefits; unemployment; open economy; wage bargaining (search for similar items in EconPapers)
JEL-codes: E24 F41 J23 J51 J65 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2001-09
New Economics Papers: this item is included in nep-ltv and nep-pub
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Citations: View citations in EconPapers (5)

Published - published in: FinanzArchiv, 2001, 58 (1),78-102

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Journal Article: Bismarck versus Beveridge: Which Unemployment Compensation System is more Prone to Labor Market Shocks? (2001)
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