Beyond the added-worker and the discouraged-worker effects: the entitled-worker effect

Arbeitspapier

This paper identifies and analyses a new effect related to the cyclical behavior of labor supply: the Entitled-Worker Effect (EWE). This effect is different from the well-known Added-Worker Effect (AWE) and Discouraged-Worker Effect (DWE). The EWE is a consequence of one of the most important labor institutions: the unemployment benefit (UB). We develop a model with uncertainty about the results of the job seeking and transactions costs linked to such a search process in which a kind of moral hazard appears. This creates new incentives for workers and produces an additional counter-cyclical pressure on aggregate labor supply, but with a different foundation from that of the AWE. Finally, we show some empirical evidence supporting the EWE for the Spanish case.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: GLO Discussion Paper ; No. 707

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Business Fluctuations; Cycles ; Social Security and Public Pensions ; Time Allocation and Labor Supply ; Unemployment: Models, Duration, Incidence, and Job Search ; Unemployment Insurance; Severance Pay; Plant Closings
• Subject: Labor force participation ; Business Cycle ; Unemployment ; Added-worker effect ; Discouraged-worker effect ; Unemployment Benefit

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Martín-Román, Ángel L.
• Event: Veröffentlichung
• (who): Global Labor Organization (GLO)
• (where): Essen
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/225987
• Last update: 10.03.2025, 11:42 AM CET