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Bismarck versus Beveridge. Flat-Rate and Earnings-Related Unemployment Insurance in a General Efficiency Wage Framework

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  • Laszlo Goerke

Abstract

A higher unemployment compensation reduces the incentives to provide effort in efficiency wage models. If there is a stronger dependence of unemployment benefits on current earnings, these incentives will be strengthened and efficiency wages can be lowered. An unemployment insurance with earnings-related benefits is thus characterised by higher employment than one with flat-rate benefits. The paper investigates under which conditions this advantage persists in the longer term when financial constraints such as an ex-post constant level of benefits and a balanced budget rule apply, or when firms are constrained to a constant level of profits.

Suggested Citation

  • Laszlo Goerke, 2001. "Bismarck versus Beveridge. Flat-Rate and Earnings-Related Unemployment Insurance in a General Efficiency Wage Framework," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(3), pages 243-260, May.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200105)57:3_243:bvb_2.0.tx_2-k
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    Citations

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    Cited by:

    1. Beissinger, Thomas & Büsse, Oliver, 2002. "The Impact of the Unemployment Benefit System on International Spillover Effects," University of Regensburg Working Papers in Business, Economics and Management Information Systems 376, University of Regensburg, Department of Economics.
    2. Tim Krieger & Thomas Lange, 2012. "Education, Life Expectancy and Pension Reform," Hacienda Pública Española / Review of Public Economics, IEF, vol. 202(3), pages 31-55, September.
    3. Ek Susanne & Holmlund Bertil, 2010. "Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-27, May.
    4. Laszlo Goerke & Markus Pannenberg & Heinrich Ursprung, 2010. "A positive theory of the earnings relationship of unemployment benefits," Public Choice, Springer, vol. 145(1), pages 137-163, October.
    5. Cremer, Helmuth & Pestieau, Pierre, 2003. "Social insurance competition between Bismarck and Beveridge," Journal of Urban Economics, Elsevier, vol. 54(1), pages 181-196, July.
    6. Yohei Sekiguchi & Masatoshi Jinno, 2018. "Beveridge Versus Bismarck Pension Systems: Considering Fertility Rates And Skill Distribution," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(05), pages 1141-1153, December.
    7. Michael Gorski & Tim Krieger & Thomas Lange, 2007. "Pensions, Education and Life Expectancy," Working Papers CIE 4, Paderborn University, CIE Center for International Economics.
    8. Thomas Beissinger & Oliver Büsse, 2001. "Bismarck versus Beveridge: Which Unemployment Compensation System is more Prone to Labor Market Shocks?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(1), pages 78-102, December.
    9. Pia Weiss, 2001. "How to Finance Unemployment Benefits in an Economy with Search Generated Equilibrium Unemployment," Public Economics 0103001, University Library of Munich, Germany.
    10. Kolmar, Martin, 2007. "Beveridge versus Bismarck public-pension systems in integrated markets," Regional Science and Urban Economics, Elsevier, vol. 37(6), pages 649-669, November.

    More about this item

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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