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Unemployment Insurance, Wage Differentials and Unemployment

Author

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  • Michael Braeuninger

Abstract

The paper explores the relation between wages, wage differentials, and the level and structure of unemployment within a wage bargaining model. There are two types of individuals: skilled and unskilled. The bargained wage of each group depends on the respective replacement rate and determines unemployment rates. Different institutional settings of the unemployment insurance system are considered in a model which includes earnings-related and flat-rate schemes as special cases. Depending on the institutional setting, replacement rates are either exogenous or endogenous. Therefore, shocks may or may not change relevant replacement rates and, thereby may have different effects on unemployment.

Suggested Citation

  • Michael Braeuninger, 2001. "Unemployment Insurance, Wage Differentials and Unemployment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(4), pages 485-501, August.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200108)57:4_485:uiwdau_2.0.tx_2-z
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    Citations

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    Cited by:

    1. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2020. "Union, Efficiency of Labour and Endogenous Growth," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(2), pages 170-202, December.
    2. Goerke, Laszlo & Madsen, Jakob B., 2003. "Earnings-Related Unemployment Benefits in a Unionised Economy," IZA Discussion Papers 701, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • 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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