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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/30518
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| Title: | | Incentive contracts and efficient unemployment benefits  |
| Authors: | | Demougin, Dominique M. Helm, Carsten |
| Issue Date: | | 2009 |
| Series/Report no.: | | CESifo working paper 2670 |
| Abstract: | | Several European countries have reformed their labor market institutions. Incentive effects of unemployment benefits have been an important aspect of these reforms. We analyze this issue in a principal-agent model, focusing on unemployment levels and labor productivity. In our model, a higher level of unemployment benefits improves the works position in wage bargaining, leading to stronger effort incentives and higher output. However, it also reduces incentives for labor market participation. Accordingly, there is a trade-off. We analyze how changes in the economic environment such as globalization and better educated works affect this trade-off. |
| Subjects: | | unemployment benefits incentive contracts Nash bargaining moral hazard globalisation |
| JEL: | | J65 D82 J41 E24 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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