Arbeitspapier
Unemployment Benefits, Contract Length and Nominal Wage Flexibility
We show in a union-bargaining model that a decrease in the unemployment benefit level increases not only equilibrium employment, but also nominal wage flexibility, and thus reduces employment variations in the case of nominal shocks. Long-term wage contracts lead to highter expected real wages and hence higher expected unemployment than short-term contracts. Therefore lower benefits reduce the expected utility gross of contract costs of a union member more with long-term than with short-term contracts and thus create an incentive for shorter contracts. Incentives for employers work in the same direction. Lower taxes associated with lower benefits also tend to make short-term contracts more attractive.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 514
- Klassifikation
-
Wirtschaft
- Thema
-
Nominal wage flexibility
contracts length
macroeconomic fluctuations
unemployment benefits
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Calmfors, Lars
Johansson, Åsa
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2001
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Calmfors, Lars
- Johansson, Åsa
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2001
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