Optimal Unemployment Benefit Policy and the Firm Productivity Distribution

Tomer Blumkin (), Leif Danziger () and Eran Yashiv ()
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Tomer Blumkin: Ben Gurion University

No 9967, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral hazard or consumption-smoothing considerations. We consider a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a declining time profile of benefits, the government can affect the equilibrium wage profile in a manner that enhances the sorting of workers across low- and high-productivity firms. We demonstrate that optimal government policy depends on the dispersion and skewness of the firms' productivity distribution.

Keywords: unemployment benefit policy; declining unemployment benefits; productivity distribution; skewness; dispersion (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2016-05
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
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Published - published in: International Tax and Public Finance 2017, 24, 36-59

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https://docs.iza.org/dp9967.pdf (application/pdf)

Related works:
Journal Article: Optimal unemployment benefit policy and the firm productivity distribution (2017)
Working Paper: Optimal Unemployment Benefit Policy and the Firm Productivity Distribution (2016)
Working Paper: OPTIMAL UNEMPLOYMENT BENEFIT POLICY AND THE FIRM PRODUCTIVITY DISTRIBUTION (2015)
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