Measuring the Equilibrium Effect of Unemployment Benefits Dispersion
Aico Van Vuuren
Erasmus University Rotterdam (EUR) - Department of Economics
Gerard J. Van den Berg
VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA); Tinbergen Institute
University of Southern California
Tinbergen Institute Discussion Paper
We analyze the impact of unemployment benefits and minimum wages using an equilibrium search model which allows for dispersion of benefits and productivity levels, job-to-job transitions, and structural and frictional unemployment. The estimation method uses readily available aggregate data on marginal distributions of unemployment durations as well as wages and benefit levels. Different causes of structural and frictional unemployment are
investigated. We investigate the efficiency of the imposition of a single benefit level for all household types and the introduction of an Earned Income Tax Credit.
Number of Pages in PDF File: 43
Keywords: Equilibrium search, wages, benefit levels, minimum wages, welfare
JEL Classification: J64, C41, E24, J31
Date posted: August 2, 2000
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