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Engineering an incentive to search for work: A comparison groups approach

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  • Stark, Oded
  • Jakubek, Marcin
  • Kobus, Martyna

Abstract

Social comparisons are important in the employment sphere. A “culture of unemployment” may evolve and prevail because it is optimal for an individual to remain unemployed when other unemployed individuals constitute his main reference group. We advance the idea that by making the receipt of unemployment benefits conditional on engagement in an incentive-enhancing activity (for example, work under state-sponsored employment schemes or participation in work-site-based training programs), a government can engineer a revision of the reference groups of an unemployed individual in order to induce him to seek work.

Suggested Citation

  • Stark, Oded & Jakubek, Marcin & Kobus, Martyna, 2015. "Engineering an incentive to search for work: A comparison groups approach," Economics Letters, Elsevier, vol. 132(C), pages 1-4.
    • Handle: RePEc:eee:ecolet:v:132:y:2015:i:c:p:1-4
    DOI: 10.1016/j.econlet.2015.03.033
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    More about this item

    Keywords

    Unemployment benefits; Social comparisons; Relative deprivation;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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