Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27187
Authors: 
Strulik, Holger
Tyran, Jean-Robert
Vanini, Paolo
Year of Publication: 
2007
Series/Report no.: 
Discussion papers // School of Economics and Management of the Hanover Leibniz University 377
Abstract: 
We develop a simple model of labor market participation, human capital degradation, and re-training. We focus on how non-participation, as a distinct state from unemployment and employment, is determined by the welfare system in interaction with labor market conditions and personal characteristics. We provide a tractable framework to analyze how the decisions to exit the labor force and to mitigate human capital degradation by re-training depend on a broad range of factors such as education, skill degradation, age, labor market shocks, labor taxes, unemployment insurance benefits and social assistance. We extend our framework by allowing for time-inconsistent choices and demonstrate the possibility of an unemployment trap.
Subjects: 
Unemployment
Non-Participation
Skill Degradation
Re-training
Unemployment Bene?ts
Social Assistance
Present-Biased Preferences
JEL: 
J64
J31
J38
Document Type: 
Working Paper

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