Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105930
Authors: 
Flaschel, Peter
Greiner, Alfred
Logeay, Camille
Proaño, Christian
Year of Publication: 
2010
Series/Report no.: 
IMK Working Paper 4/2010
Abstract: 
In this paper we investigate the macroeconomic consequences of the introduction of an unemployment benefit system and a minimum wage barrier for both skilled and unskilled workers against the background of Goodwin's (1967) model. In the analyzed framework, characterized by free "hiring" and "firing" in the first labor markets, we can show a) that large fluctuations in employment are made (at least partially) socially acceptable through the workfare nature of the unemployment benefit system and b) that minimum real wages provide additional stability to the system dynamics by decreasing the amplitude of the fluctuations in employment and income distribution (and the related degradation of the workforce skills and family structures they are otherwise subject to).
Subjects: 
Distributive cycles
minimum wages
stability
combined wages
base income
workfare
JEL: 
E32
E64
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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