Dynamic Wage Bargaining if Benefits are Tied to Individual Wages

Arbeitspapier

In dynamic wage bargaining models it is usually assumed that individual unemployment benefits are a fraction of the average wage level. In most countries, however, unemployment benefits are instead tied to the previous level of individually earned wages. We show how the analysis has to be modified if this fact is taken into account and compare our findings for the wage-setting curve with outcomes under other unemployment compensation schemes. In particular, we show that the widely used vertical wage-setting curve relies on more restrictive assumptions than usually considered. We also demonstrate that a reduction of unemployment benefits of those who get unemployed after the bargaining period leads to higher equilibrium unemployment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 389

Classification and Topics

• Classification: Wirtschaft ; Trade Unions: Objectives, Structure, and Effects ; Unemployment: Models, Duration, Incidence, and Job Search ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
• Subject: Dynamic wage bargaining ; wage curve ; unemployment benefits ; Lohnniveau ; Lohnverhandlungstheorie ; Arbeitslosenversicherung ; Theorie der Arbeitslosigkeit ; Beschäftigungseffekt ; Theorie ; Lohnkurve

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Beissinger, Thomas ; Egger, Hartmut
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/21249
• Last update: 10.03.2025, 11:41 AM CET