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dc.contributor.authorBalla, Katalinen_US
dc.contributor.authorKöllîo, Jánosen_US
dc.contributor.authorSimonovits, Andrásen_US
dc.date.accessioned2006-12-14en_US
dc.date.accessioned2010-07-07T09:52:08Z-
dc.date.available2010-07-07T09:52:08Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/33873-
dc.description.abstractWe extend the benchmark model of Aghion and Blanchard (1994), assuming two segments of the emerging private sector that differ in workers' productivity. We look at the paths of employment, wages, taxes, labor costs and profits during and after the transition, up until the shock is fully absorbed. Viability is a function of the speed of job destruction and the strength of the initial shock to employment. In the long run, the system asymptotically converges to full employment. If the rate of job destruction is sufficiently low, the unemployment rates can get close to steady-state values during the transition. Within the realm of feasible scenarios, unemployment differentials are simultaneously determined by the speed of destruction, the level of benefits and the cross-subsidization of low-productivity groups. Lower benefits induce higher aggregate employment and inequalities throughout the redeployment process, while higher subsidies are conducive to lower inequalities and higher aggregate employment. The choice between low versus high benefits is a matter of preferences but the systems with subsidies dominate the systems with no subsidies. The subsidy has strongest marginal effect on employment and income when job destruction is fast and benefits are high.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesIZA Discussion Papers 2179en_US
dc.subject.jelJ64en_US
dc.subject.jelP31en_US
dc.subject.jelH53en_US
dc.subject.ddc330en_US
dc.subject.keywordtransitionen_US
dc.subject.keywordheterogeneous laboren_US
dc.subject.keywordjob creationen_US
dc.subject.keywordunemployment benefiten_US
dc.subject.keywordwage subsidyen_US
dc.titleTransition with heterogeneous laboren_US
dc.typeWorking Paperen_US
dc.identifier.ppn514361344en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
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