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Job Qualities, Search Unemployment, and Public Policy

Jian Xin Heng, Benoit Julien (), John Kennes () and Ian King ()
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Jian Xin Heng: Yale University

No 570, Discussion Papers Series from University of Queensland, School of Economics

Abstract: We analyse the impact of public policy on unemployment and the qualities of jobs created in an economy with directed search frictions. Policy variables include unemployment benefits, job creation subsidies, and a graduated income tax structure with a government budget constraint. Firms choose to create either high or low quality jobs and bid for labor. We find, among other things, that neither the upper tax threshold nor the upper tax rate affect the mix of job qualities or unemployment, and that, while subsidies to high quality jobs affect the mix of job types, they have no effect on unemployment. We also identify a policy configuration that allows for the simultaneous existence of constrained efficiency, ex post equity, and a balanced government budget.

Keywords: Directed search; job heterogeneity; public policy (search for similar items in EconPapers)
JEL-codes: H21 J64 (search for similar items in EconPapers)
Date: 2016-07-25
New Economics Papers: this item is included in nep-dge and nep-pbe
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