Incentive Contracts and Efficient Unemployment Benefits in a Globalized World

Arbeitspapier

Several European countries have reformed their labor market institutions. Incentive effects of unemployment benefits have been an important aspect of these reforms. We analyse this issue in a principal-agent model, higher level of unemployment benefits improves the workers' 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.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Oldenburg Discussion Papers in Economics ; No. V-348-12

Classification and Topics

• Classification: Wirtschaft ; Unemployment Insurance; Severance Pay; Plant Closings ; Asymmetric and Private Information; Mechanism Design ; Labor Contracts ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
• Subject: Unemployment benefits ; incentive contracts ; Nash bargaining ; moral hazard ; globalization ; Arbeitslosenversicherung ; Ökonomischer Anreiz ; Arbeitsmarktintegration ; Moral Hazard ; Asymmetrische Information ; Nash-Gleichgewicht ; Institutionelle Infrastruktur ; Globalisierung ; Prinzipal-Agent-Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Helm, Carsten ; Demougin, Dominique
• Event: Veröffentlichung
• (who): University of Oldenburg, Department of Economics
• (where): Oldenburg
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/105037