Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19071
Authors: 
Engström, Per
Holmlund, Bertil
Year of Publication: 
2005
Series/Report no.: 
CESifo working papers 1607
Abstract: 
The paper presents a tractable general equilibrium model of search unemployment that incorporates absence from work as a distinct labor force state. Absenteeism is driven by random shocks to the value of leisure that are private information to the workers. Firms offer wages, and possibly sick pay, so as to maximize expected profits, recognizing that the compensation package affects the queue of job applicants and possibly the absence rate as well. Shocks to the value of leisure among nonemployed individuals interact with their search decisions and trigger movements into and out of the labor force. The analysis provides a number of results concerning the impact of social insurance benefits and other determinants of workers? and firms? behavior. For example, higher nonemployment benefits are shown to increase absenteeism among employed workers. The normative anlysis identifies externalities associated with firm-provided sick pay and examines the welfare implications of alternative policies. Conditions are given under which welfare equivalence holds between publicly provided and firm-provided sick pay. Benefit differentiation across states of non-work are found to be associated with non-trivial welfare gains.
Subjects: 
absenteeism
search
unemployment
social insurance
JEL: 
J65
J64
J21
Document Type: 
Working Paper

Files in This Item:
File
Size
619 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.