Incentive contracts and efficient unemployment benefits

Arbeitspapier

Several European countries have reformed their labor market institutions. Incentive effects of unemployment benefits have been an important aspect of these reforms. We analyze this issue in a principal-agent model, focusing on unemployment levels and labor productivity. In our model, a higher level of unemployment benefits improves the works 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 works affect this trade-off.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2670

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 ; globalisation ; Arbeitslosenversicherung ; Ökonomischer Anreiz ; Berufliche Integration ; Moral Hazard ; Asymmetrische Information ; Nash-Gleichgewicht ; Institutionelle Infrastruktur ; Globalisierung ; Agency Theory

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Demougin, Dominique M. ; Helm, Carsten
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/30518
• Last update: 10.03.2025, 11:44 AM CET