Equilibrium Search with Time-Varying Unemployment Benefits

24 Pages Posted: 21 Jul 2001

See all articles by James Albrecht

James Albrecht

Georgetown University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Susan Vroman

Georgetown University; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2001

Abstract

In this paper, we show how time-varying unemployment benefits can generate equilibrium wage dispersion in an economy in which identical firms post wages and homogeneous workers search for acceptable offers. We allow for matching frictions and for free entry and exit of vacancies, and we model time-varying unemployment benefits in a simple and natural way. We characterize the equilibrium, and we derive the comparative statics effects of changes in the unemployment compensation system on the equilibrium wage distribution and the unemployment rate.

JEL Classification: J64, D83

Suggested Citation

Albrecht, James W. and Vroman, Susan B., Equilibrium Search with Time-Varying Unemployment Benefits (May 2001). CESifo Working Paper Series No. 487. Available at SSRN: https://ssrn.com/abstract=274301

James W. Albrecht (Contact Author)

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-6105 (Phone)
202-687-6102 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

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

Susan B. Vroman

Georgetown University ( email )

Washington, DC 20057
United States
202-687-6024 (Phone)
202-687-6102 (Fax)

IZA Institute of Labor Economics

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

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