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The Unemployed Individual's Marginal Willingness to Pay for the Remaining Entitlement Period

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  • Jos Van Ommeren

Abstract

. This paper introduces a method of estimating the unemployed individual's marginal willingness to pay for the remaining entitlement period by application of search theory. It is demonstrated that search theory implies that the unemployed individual's marginal willingness to pay for the remaining entitlement period must be less than the value of the unemployment benefit. When benefits expire, though, the willingness to pay for an additional period must be equal to the benefit received during that period. The empirical relevance of this method is shown by re‐interpreting the studies of Meyer (Econometrica 58: 757–782, 1990) and Katz and Meyer (Journal of Public Economics 41: 45–72, 1990).

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  • Jos Van Ommeren, 2003. "The Unemployed Individual's Marginal Willingness to Pay for the Remaining Entitlement Period," LABOUR, CEIS, vol. 17(2), pages 271-283, June.
    • Handle: RePEc:bla:labour:v:17:y:2003:i:2:p:271-283
    DOI: 10.1111/1467-9914.00230
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    References listed on IDEAS

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    1. Frederick J. Tannery, 1983. "Search Effort and Unemployment Insurance Reconsidered," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 432-440.
    2. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 255-277.
    3. Katz, Lawrence F. & Meyer, Bruce D., 1990. "The impact of the potential duration of unemployment benefits on the duration of unemployment," Journal of Public Economics, Elsevier, vol. 41(1), pages 45-72, February.
    4. Timothy J. Gronberg & W. Robert Reed, 1994. "Estimating Workers' Marginal Willingness to Pay for Job Attributes Using Duration Data," Journal of Human Resources, University of Wisconsin Press, vol. 29(3), pages 911-931.
    5. Herzog, Henry W, Jr & Schlottmann, Alan M, 1990. "Valuing Risk in the Workplace: Market Price, Willingness to Pay, and the Optimal Provision of Safety," The Review of Economics and Statistics, MIT Press, vol. 72(3), pages 463-470, August.
    6. Carling, Kenneth & Edin, Per-Anders & Harkman, Anders & Holmlund, Bertil, 1996. "Unemployment duration, unemployment benefits, and labor market programs in Sweden," Journal of Public Economics, Elsevier, vol. 59(3), pages 313-334, March.
    7. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
    8. Jos Van Ommeren & Gerard J. Van Den Berg & Cees Gorter, 2000. "Estimating the Marginal Willingness to Pay for Commuting," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 541-563, August.
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