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Incentive Contracts and Efficient Unemployment Benefits

Demougin, Dominique ; Helm, Carsten :
Incentive Contracts and Efficient Unemployment Benefits.
[Online-Edition: http://econstor.eu/bitstream/10419/32069/1/588003867.PDF]
In: Darmstadt Discussion Papers in Economics , 191 .
[Report], (2008)

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Offizielle URL: http://econstor.eu/bitstream/10419/32069/1/588003867.PDF

Kurzbeschreibung (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.

Typ des Eintrags: Report
Erschienen: 2008
Autor(en): Demougin, Dominique ; Helm, Carsten
Titel: Incentive Contracts and Efficient Unemployment Benefits
Sprache: Englisch
Kurzbeschreibung (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.

Reihe: Darmstadt Discussion Papers in Economics
Band: 191
Freie Schlagworte: Unemployment benefits, incentive contracts, Nash bargaining, moral hazard, globalisation
Fachbereich(e)/-gebiet(e): 01 Fachbereich Rechts- und Wirtschaftswissenschaften
01 Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete
01 Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete > Angewandte Mikroökonomik und Institutionenökonomik
Hinterlegungsdatum: 19 Aug 2009 12:21
Offizielle URL: http://econstor.eu/bitstream/10419/32069/1/588003867.PDF
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JEL - Classification : J65, D82, J41, E24

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