Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/21218 
Year of Publication: 
2001
Series/Report no.: 
IZA Discussion Papers No. 358
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Based on a model with imperfectly competitive labor and product markets the real consequences of labor market shocks for economies with either an earnings-related or flatrate unemployment compensation system are considered. A distinctive feature of the analysis is the comparison of both unemployment compensation systems in a two-country setting. It is demonstrated that the performance of a system with earnings-related or flat-rate unemployment benefits depends on whether the labor market shock is provoked in the home country or originates from abroad. We also point out how our results extend to two-tier unemployment compensation systems which differ with respect to the relative importance of earnings-related and flat-rate benefits.
Subjects: 
Earnings-related benefits
flat-rate benefits
unemployment
open economy
monopolistic competition
wage bargaining
JEL: 
E24
F41
J23
J51
J65
Document Type: 
Working Paper

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