Building Blocks in the Economics of Mandates

33 Pages Posted: 8 Dec 2005

See all articles by John T. Addison

John T. Addison

University of South Carolina - Moore School of Business - Department of Economics; IZA Institute of Labor Economics

Richard Barrett

University of Birmingham - Department of Economics

Stanley Siebert

Business School, University of Birmingham; IZA Institute of Labor Economics; Institute of Economic Affairs (IEA)

Date Written: November 2005

Abstract

The paper constructs an asymmetric information model to investigate the efficiency and equity cases for government mandated benefits. A mandate can improve workers' insurance, and may also redistribute in favour of more deserving workers. The risk is that it may also reduce output. The more diverse are free market contracts - separating the various worker types - the more likely it is that such output effects will on balance serve to reduce welfare. It is shown that adverse effects can be reduced by restricting mandates to larger firms. An alternative to a mandate is direct government provision. We demonstrate that direct government provision has the advantage over mandates of preserving separations.

Keywords: asymmetric information, labour mandates, compensation packages

JEL Classification: D82, J33

Suggested Citation

Addison, John T. and Barrett, Richard and Siebert, Stanley, Building Blocks in the Economics of Mandates (November 2005). IZA Discussion Paper No. 1866. Available at SSRN: https://ssrn.com/abstract=868993

John T. Addison (Contact Author)

University of South Carolina - Moore School of Business - Department of Economics ( email )

The Francis M. Hipp Building
1705 College Street
Columbia, SC 29208
United States
803-777-7400 (Phone)
803-777-6876 (Fax)

HOME PAGE: http://mooreschool.sc.edu/moore/economics/profiles/addison.htm

IZA Institute of Labor Economics

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

Richard Barrett

University of Birmingham - Department of Economics ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

Stanley Siebert

Business School, University of Birmingham ( email )

Edgbaston
Birmingham, B15 2TT
United Kingdom
(44) 1214146698 (Phone)

IZA Institute of Labor Economics

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

Institute of Economic Affairs (IEA) ( email )

2 Lord North Street, Westminster
London, SW1P 3LB
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
39
Abstract Views
598
PlumX Metrics