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Labor participation externalities and unemployment

Author

Listed:
  • Chia-hui Lu

    (National Taipei University, Department of Economics)

Abstract

Introducing labor participation externalities into a standard search model, this paper investigates the impact of such externalities and the reform of unemployment compensation on macroeconomic performance. This paper finds that keeping up with the Joneses behavior on labor participation accompanying the reduction in unemployment benefits can decrease the unemployment rate and increase the labor participation rate.

Suggested Citation

  • Chia-hui Lu, 2020. "Labor participation externalities and unemployment," Economics Bulletin, AccessEcon, vol. 40(2), pages 1002-1010.
    • Handle: RePEc:ebl:ecbull:eb-19-00901
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I2-P85.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Keeping up with the Joneses; unemployment; search and matching;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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