Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185310 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11850
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper proposes a protocol for considering the social cost of unemployment by taking into account three different aspects: incidence, severity and hysteresis. Incidence refers to the conventional unemployment rate; severity takes in both unemployment duration and the associated income loss; and hysteresis refers to the probability of remaining unemployed. The social cost of unemployment is regarded as a welfare loss, which is measured by a utilitarian social welfare function whose arguments are the individual disutilities of unemployed workers. Each individual disutility is modelled as a function of income loss, unemployment duration and hysteresis. The resulting formula is simple and easy to understand and implement. We apply this assessment protocol to the Spanish labour market, using the official register of unemployed workers compiled by the Public Employment Service.
Subjects: 
social cost of unemployment
unemployment benefits
incidence
severity and hysteresis of unemployment
Spanish labour market
regional differences
JEL: 
J64
J65
I31
Document Type: 
Working Paper

Files in This Item:
File
Size
1.01 MB





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