A note on the unemployed individual's marginal willingness to pay for the remaining entitlement period

J. van Ommeren
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J. van Ommeren: Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics

No 13, Serie Research Memoranda from VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics

Abstract: This paper introduces a method to estimate the unemployed individual ‘s marginal willingness to pay for the remaining entitlement period by application of search theory. It is demonstrated that search theory implies that the unemployed individuals’ marginal willingness to pay the remaining entitlement period must be less than the value of the unemployment benefit. When benefits exhaust though, the willingness to pay for an additional period must be equal to the benefit received during that period. The empirical relevance of this method is shown by re-interpreting the studies of Meyer (1990) and Katz and Meyer (1990) .

Keywords: unemployment duration; unemployment benefits; marginal willingness to pay; search theory; nonstationary model (search for similar items in EconPapers)
JEL-codes: H53 J64 J65 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:vua:wpaper:2002-13

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