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In-work benefits and unemployment

By Mirco Tonin and Ann-Sofie Kolm

Abstract

In-work benefits are becoming an increasingly relevant labour market policy, gradually expanding in scope and geographical coverage. This paper investigates the equilibrium impact of in-work benefits and contrasts it with the traditional partial equilibrium analysis. We find under which conditions accounting for equilibrium wage adjustments amplifies the impact of in-work benefits on search intensity, participation, employment, and unemployment, compared to a framework in which wages are fixed. We also account for the financing of these benefits and determine the level of benefits necessary to achieve efficiency in a labour market characterized by search externalities

Topics: HD28, HJ, JF
Year: 2011
OAI identifier: oai:eprints.soton.ac.uk:174579
Provided by: e-Prints Soton
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  • http://dx.doi.org/10.1007/s107... (external link)
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