Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71258
Authors: 
Cockx, Bart
Ghirelli, Corinna
Van der Linden, Bruno
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper: Social Protection 4187
Abstract: 
This paper develops a partial equilibrium job search model to study the behavioral and welfare implications of an Unemployment Insurance (UI) scheme in which job search requirements are imposed on UI recipients with hyperbolic preferences. We show that, if the search requirements are well chosen, a perfect monitoring scheme can in principle increase the job finding rate and, contrary to what happens with exponential discounting, it can raise the expected lifetime utility of the current and future selves of sophisticated hyperbolic discounters. The same holds for nai¨ve agents if the welfare criterion ignores their misperception problem. In sum, introducing a perfect monitoring scheme can be a Pareto improvement. However, if claimants have the opportunity to withdraw from the UI scheme, their long-run utility can even be lower than in the absence of job search requirements. Imperfections in the measurement of job-search effort further reduce the chances that monitoring raises the welfare of the unemployed.
Subjects: 
job search model
job search monitoring
non-compliance
hyperbolic discounting
social efficiency
JEL: 
D60
D90
J64
J65
J68
Document Type: 
Working Paper

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