Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82465
Authors: 
Lindblad, Hans
Year of Publication: 
2000
Series/Report no.: 
Sveriges Riksbank Working Paper Series 101
Abstract: 
This paper studies how wages and employment are affected by unemployment insurance when there is endogenous labor mobility. In a simple model with symmetric sectors, it is shown that introducing labor mobility reduces the wage level, and thereby also unemployment. It is also shown that an increased benefit level has an ambiguous effect on the wage level, contrary to the standard result in the literature. The finding in the literature that an increase in the fraction of unemployment costs borne by the own sector reduces the wage level is shown to hold when labor is mobile as well. <p> Another result is that wage costs in general are higher when unemployment benefits are financed through pay-roll taxes compared to the case when they are financed through income taxes. Thus in general, the tax equivalence result in the literature does not hold.
Subjects: 
Labor mobility
Unemployment benefits
JEL: 
E50
Document Type: 
Working Paper

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