The Elasticity of the Unemployment Rate with Respect to Benefits
Kai Philipp Christoffel
European Central Bank (ECB)
Federal Reserve Banks - Federal Reserve Bank of Philadelphia
August 11, 2008
FRB of Philadelphia Working Paper No. 08-15
If the Mortensen and Pissarides model with efficient bargaining is calibrated to replicate the fluctuations of unemployment over the business cycle, it implies a far too strong rise of the unemployment rate when unemployment benefits rise. This paper explores an alternative, right-to-manage bargaining scheme. This also generates the right degree of fluctuations of unemployment but at the same time implies a reasonable elasticity of unemployment with respect to benefits.
Number of Pages in PDF File: 11
Keywords: Real business cycles, bargaining, structural reforms, unemployment insurance
JEL Classification: E24, E32, J64, I38working papers series
Date posted: September 6, 2008
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo6 in 0.390 seconds