Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/104078 
Year of Publication: 
2000
Series/Report no.: 
Munich Discussion Paper No. 2000-13
Publisher: 
Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät, München
Abstract: 
In most OECD countries, unemployment benefits are tied to individual previous labor earnings. We study the progressivity of this indexation with regard to its effects on employment, output and wages in four equilibrinin models of the labor market keeping the level of unemployment benefits fixed. In the two cases of competitive labor markets and decentralized wage bargaining, employment and output increase, while wages decrease with the degree of indexation. In the model with search unemployment and Nash wage bargaining, all wages, employment and output increase, while die indexation of employirient benefits to previous carnings has no effect in the case of efficiency wages. In addition, our results suggest that a more progressive mdexation of unemployment benefits to labor earnings is wellare enhancing.
Subjects: 
Unemployment Benefits
Progressive Indexation
Union Wage-Setting
Search Unemployment
Efficiency Wages
JEL: 
H57
M55
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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