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

Joachim Wolff and Andrey Launov

No 395, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: In this paper we ask a question whether a prolonging of entitlement to unemployment benefits that happened in the mid 80s can explain the unusual increase in unemployment rates of unskilled and old workers. To answer this question we estimate a version of Burdett-Mortensen model of search equilibrium and analyze how reservation wages and search intensities responded to benefit reforms. We try both nonparametric and fully-parametric estimation methods and discover the cases in which the first one can not be applicable. We find that the entitlement reforms are in big part responsible for the increase of unemployment among unskilled workers

Keywords: search equilibrium; unempoyment benefits; parametric estimation (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge and nep-lab
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