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Measuring the Equilibrium Effect of Unemployment Benefits Dispersion

Tinbergen Institute Discussion Paper

43 Pages Posted: 2 Aug 2000  

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); IZA Institute of Labor Economics; Tinbergen Institute

Geert Ridder

University of Southern California

Date Written: July 2000

Abstract

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.

Keywords: Equilibrium search, wages, benefit levels, minimum wages, welfare

JEL Classification: J64, C41, E24, J31

Suggested Citation

van Vuuren, Aico and van den Berg, Gerard J. and Ridder, Geert, Measuring the Equilibrium Effect of Unemployment Benefits Dispersion (July 2000). Tinbergen Institute Discussion Paper. Available at SSRN: https://ssrn.com/abstract=237599 or http://dx.doi.org/10.2139/ssrn.237599

Aico Van Vuuren (Contact Author)

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 4082158 (Phone)
+31 10 4089149 (Fax)

Gerard J. Van den Berg

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6132 (Phone)
+32 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Geert Ridder

University of Southern California ( email )

Kaprielian Hall
Los Angeles, CA 90089
United States
213-740-2110 (Phone)
213-740-8543 (Fax)

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