Flexicurity and Job Reallocation

Christian Keuschnigg and Thomas Davoine

University of St. Gallen Department of Economics working paper series 2010 from Department of Economics, University of St. Gallen

Abstract: This paper develops a general equilibrium model with safe and risky jobs where unemployment is concentrated in a highly productive but volatile sector. Frictional unemployment arises in the process of job creation, firing and retraining for alternative employment. The paper derives an optimal welfare policy which combines the design of the tax schedule with three pillars of the `flexicurity' model. The optimal policy is characterized by (i) a progressive wage tax schedule; (ii) a wage subsidy to re-employed workers; (iii) unemployment insurance benefits; (iv) job protection to contain firing; and (v) active labor market policy to facilitate labor reallocation.

Keywords: Flexicurity; insurance; job protection; active labor market policy (search for similar items in EconPapers)
JEL-codes: H30 J32 J64 J65 J68 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2010-04
New Economics Papers: this item is included in nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Flexicurity and Job Reallocation (2015)
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