Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144966
Authors: 
Blumkin, Tomer
Danziger, Leif
Yashiv, Eran
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5931
Abstract: 
This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral hazard or consumption-smoothing considerations. We consider a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a declining time profile of benefits, the government can affect the equilibrium wage profile in a manner that enhances the sorting of workers across low- and high-productivity firms. We demonstrate that optimal government policy depends on the dispersion and skewness of the firms’ productivity distribution.
Subjects: 
unemployment benefit policy
declining unemployment benefits
productivity distribution
skewness
dispersion
JEL: 
J64
J65
Document Type: 
Working Paper

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