Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105037
Authors: 
Helm, Carsten
Demougin, Dominique
Year of Publication: 
2012
Series/Report no.: 
Oldenburg Discussion Papers in Economics V-348-12
Abstract: 
Several European countries have reformed their labor market institutions. Incentive effects of unemployment benefits have been an important aspect of these reforms. We analyse this issue in a principal-agent model, higher level of unemployment benefits improves the workers' 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 workers affect this trade-off.
Subjects: 
Unemployment benefits
incentive contracts
Nash bargaining
moral hazard
globalization
JEL: 
J65
D82
J41
E24
Document Type: 
Working Paper

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