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Incentive Contracts and Efficient Unemployment Benefits

Demougin, Dominique and Helm, Carsten :
Incentive Contracts and Efficient Unemployment Benefits.
[Online-Edition]
In: Darmstadt Discussion Papers in Economics, 191.
[Report], (2008)

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Item Type: Report
Title: Incentive Contracts and Efficient Unemployment Benefits
Language: English
Abstract:

Several European countries have reformed their labor market institutions. Incentive effects of unemployment benefits have been an important aspect of these reforms. We analyze this issue in a principal-agent model, focusing on unemployment levels and labor productivity. In our model, a higher level of unemployment benefits improves the worker's position in wage bargaining, leading to stronger effort incentives and higher output. However, it also reduces incentives for labor market participation. Accordingly, there is a trade-off. We analyze how changes in the economic environment such as globalization and better educated workers affect this trade-off.

Series Name: Darmstadt Discussion Papers in Economics
Volume: 191
Uncontrolled Keywords: Unemployment benefits, incentive contracts, Nash bargaining, moral hazard, globalisation
Classification DDC: 300 Sozialwissenschaften > 330 Wirtschaft
Divisions: 01 Law and Economics
01 Law and Economics > Volkswirtschaftliche Fachgebiete
01 Law and Economics > Volkswirtschaftliche Fachgebiete > Angewandte Mikroökonomik und Institutionenökonomik
Date Deposited: 19 Aug 2009 12:21
Last Modified: 26 Jan 2016 15:20
Official URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id...
URN: urn:nbn:de:tuda-tuprints-47352
Additional Information:

JEL - Classification : J65, D82, J41, E24

Additional Information:

JEL - Classification : J65, D82, J41, E24

URI: http://tuprints.ulb.tu-darmstadt.de/id/eprint/4735
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