The Social Cost of Unemployment: The Spanish Labour Market from a Social Welfare Approach

Arbeitspapier

This paper proposes a protocol for considering the social cost of unemployment by taking into account three different aspects: incidence, severity and hysteresis. Incidence refers to the conventional unemployment rate; severity takes in both unemployment duration and the associated income loss; and hysteresis refers to the probability of remaining unemployed. The social cost of unemployment is regarded as a welfare loss, which is measured by a utilitarian social welfare function whose arguments are the individual disutilities of unemployed workers. Each individual disutility is modelled as a function of income loss, unemployment duration and hysteresis. The resulting formula is simple and easy to understand and implement. We apply this assessment protocol to the Spanish labour market, using the official register of unemployed workers compiled by the Public Employment Service.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 11850

Classification and Topics

• Classification: Wirtschaft ; Unemployment: Models, Duration, Incidence, and Job Search ; Unemployment Insurance; Severance Pay; Plant Closings ; General Welfare; Well-Being
• Subject: social cost of unemployment ; unemployment benefits ; incidence ; severity and hysteresis of unemployment ; Spanish labour market ; regional differences

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gorjón, Lucía ; de la Rica, Sara ; Villar, Antonio
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/185310
• Last update: 10.03.2025, 11:43 AM CET