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Staying on the Dole

Holger Strulik (), Jean-Robert Tyran () and Paolo Vanini

No 06-18, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: We develop a simple model of short- and long-term unemployment to study how labor market institutions interact with labor market conditions and personal characteristics of the unemployed. We analyze how the decision to exit unemployment and to mitigate human capital degradation by retraining depends on education, skill degradation, age, labor market tightness, taxes, unemployment insurance benefits and welfare assistance. We extend our analysis by allowing for time-inconsistent choices and demonstrate the possibility of an unemployment trap.

Keywords: unemployment; skill degradation; retraining; unemployment benefits; welfare assistance; present-biased preferences (search for similar items in EconPapers)
JEL-codes: J64 J31 J38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-hrm, nep-ias and nep-lab
Date: 2006-10
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Working Paper: Staying on the Dole (2007) Downloads
Working Paper: Staying on the Dole (2006) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:0618

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