Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/225987
Authors: 
Martín-Román, Ángel L.
Year of Publication: 
2020
Series/Report no.: 
GLO Discussion Paper 707
Abstract: 
This paper identifies and analyses a new effect related to the cyclical behavior of labor supply: the Entitled-Worker Effect (EWE). This effect is different from the well-known Added-Worker Effect (AWE) and Discouraged-Worker Effect (DWE). The EWE is a consequence of one of the most important labor institutions: the unemployment benefit (UB). We develop a model with uncertainty about the results of the job seeking and transactions costs linked to such a search process in which a kind of moral hazard appears. This creates new incentives for workers and produces an additional counter-cyclical pressure on aggregate labor supply, but with a different foundation from that of the AWE. Finally, we show some empirical evidence supporting the EWE for the Spanish case.
Subjects: 
Labor force participation
Business Cycle
Unemployment
Added-worker effect
Discouraged-worker effect
Unemployment Benefit
JEL: 
E24
E32
H55
J22
J64
J65
Document Type: 
Working Paper

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