IDEAS home Printed from https://ideas.repec.org/a/ucp/jlabec/v13y1995i4p623-52.html
   My bibliography  Save this article

General Equilibrium Effects of Unemployment Compensation with Labor Force Participation

Author

Listed:
  • Sattinger, Michael

Abstract

This article examines the effects of unemployment compensation when the size of the labor force depends on unemployment benefits. The analysis is based on an aggregate model with search and matching in which unemployment compensation affects the wage determination process and the number of jobs and workers. As with partial equilibrium models, unemployment compensation raises the unemployment rate and the ratio of unemployed to vacancies. However, wages may go up or down and firms may be better-off. Generally, employed workers are worse-off. Unemployment compensation transfers income from employed factors to unemployed factors, leading to greater input levels. Copyright 1995 by University of Chicago Press.

Suggested Citation

  • Sattinger, Michael, 1995. "General Equilibrium Effects of Unemployment Compensation with Labor Force Participation," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 623-652, October.
    • Handle: RePEc:ucp:jlabec:v:13:y:1995:i:4:p:623-52
    DOI: 10.1086/298387
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/298387
    File Function: full text
    Download Restriction: Access to full text is restricted to subscribers. See http://www.journals.uchicago.edu/JOLE for details.
    File URL: https://libkey.io/10.1086/298387?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dale T. Mortensen, 1977. "Unemployment Insurance and Job Search Decisions," ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
    2. N/A, 1987. "Chaptefi III. the British Economy Since 1979," National Institute Economic Review, National Institute of Economic and Social Research, vol. 122(1), pages 41-46, November.
    3. repec:bla:scandj:v:92:y:1990:i:4:p:531-40 is not listed on IDEAS
    4. N/A, 1987. "Chapter I. the Home Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 121(1), pages 6-20, August.
    5. anonymous, 1987. "New Zealand economic chronology 1986," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 50, march.
    6. Hamermesh, Daniel S, 1979. "Entitlement Effects, Unemployment Insurance and Employment Decisions," Economic Inquiry, Western Economic Association International, vol. 17(3), pages 317-332, July.
    7. Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
    8. anonymous, 1987. "Review of domestic and external economy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 50, march.
    9. James M. Poterba & Lawrence H. Summers, 1993. "Unemployment Benefits, Labor Market Transitions, and Spurious Flows: A Multinational Logit Model with Errors in Classification," NBER Working Papers 4434, National Bureau of Economic Research, Inc.
    10. -, 1987. "Evolución de la economía brasileña, 1987," Informe Estadístico – Oficina de la CEPAL en Brasilia 27977, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. N/A, 1987. "Chapter I. The Home Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 119(1), pages 6-23, February.
    12. N/A, 1987. "Chapter I. The Home Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 120(1), pages 6-20, May.
    13. N/A, 1987. "Chapter I. the Home Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 122(1), pages 7-23, November.
    14. Burdett, Kenneth, 1979. "Unemployment Insurance Payments as a Search Subsidy: A Theoretical Analysis," Economic Inquiry, Western Economic Association International, vol. 17(3), pages 333-343, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Garibaldi, Pietro & Wasmer, Etienne, 2001. "Labor Market Flows and Equilibrium Search Unemployment," IZA Discussion Papers 406, Institute of Labor Economics (IZA).
    2. repec:hal:spmain:info:hdl:2441/8921 is not listed on IDEAS
    3. Michael Sattinger, 2002. "A Queuing Model of the Market for Access to Trading Partners," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 533-548, May.
    4. repec:hal:wpspec:info:hdl:2441/8921 is not listed on IDEAS
    5. Mário Centeno & Márcio Corrêa, 2006. "Job Matching, Unexpected Obligations And Retirement Decisions," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 159, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. Sattinger, Michael, 2001. "A Kaldor Matching Model of Real Wage Declines," IZA Discussion Papers 380, Institute of Labor Economics (IZA).
    7. Pietro Garibaldi & Etienne Wasmer, 2005. "Equilibrium Search Unemployment, Endogenous Participation, And Labor Market Flows," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 851-882, June.
    8. Falk, Armin & Huffman, David B. & Sunde, Uwe, 2006. "Do I Have What It Takes? Equilibrium Search with Type Uncertainty and Non-Participation," IZA Discussion Papers 2531, Institute of Labor Economics (IZA).
    9. Pietro Garibaldi & Etienne Wasmer, 2005. "Equilibrium Search Unemployment, Endogenous Participation and Labor Market Flows," SciencePo Working papers hal-01020784, HAL.
    10. repec:spo:wpecon:info:hdl:2441/8921 is not listed on IDEAS
    11. repec:spo:wpmain:info:hdl:2441/8921 is not listed on IDEAS
    12. Chen, Been-Lon & Hsu, Mei & Lai, Chih-Fang, 2016. "Relation between growth and unemployment in a model with labor-force participation and adverse labor institutions," Journal of Macroeconomics, Elsevier, vol. 50(C), pages 273-292.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Almeida, Alvaro & Goodhart, Charles & Payne, Richard, 1998. "The Effects of Macroeconomic News on High Frequency Exchange Rate Behavior," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 33(3), pages 383-408, September.
    2. Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-1235, December.
    3. Philip Jung & Moritz Kuhn, 2019. "Earnings Losses and Labor Mobility Over the Life Cycle," Journal of the European Economic Association, European Economic Association, vol. 17(3), pages 678-724.
    4. Merlo, Antonio, 1997. "Bargaining over Governments in a Stochastic Environment," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 101-131, February.
    5. Juhn, Chinhui & Murphy, Kevin M, 1997. "Wage Inequality and Family Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 72-97, January.
    6. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 13(4), pages 653-677, October.
    7. Harrison, Alan & Stewart, Mark, 1994. "Is Strike Behavior Cyclical?," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 524-553, October.
    8. Heaton, John & Lucas, Deborah J, 1996. "Evaluating the Effects of Incomplete Markets on Risk Sharing and Asset Pricing," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 443-487, June.
    9. Feldstein, Martin, 1995. "The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 551-572, June.
    10. Cramton, Peter C & Tracy, Joseph S, 1994. "The Determinants of U.S. Labor Disputes," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 180-209, April.
    11. Mccorriston, Steve & Sheldon, Ian, 1989. "Imperfect Competition, Trade Policy and Processed Agricultural Products," Occasional Papers 232831, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    12. Suthawan Prukumpai, 2015. "Time-varying Industrial Portfolio Betas under the Regime-switching Model: Evidence from the Stock Exchange of Thailand," Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 22(2), pages 54-76, December.
    13. Baker, Michael, 1997. "Growth-Rate Heterogeneity and the Covariance Structure of Life-Cycle Earnings," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 338-375, April.
    14. Belzil, Christian, 1996. "Relative Efficiencies and Comparative Advantages in Job Search," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 154-173, January.
    15. Prendergast, Canice & Stole, Lars, 1996. "Impetuous Youngsters and Jaded Old-Timers: Acquiring a Reputation for Learning," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1105-1134, December.
    16. Reilly, Kevin T, 1994. "Annual Hours and Weeks in a Life-Cycle Labor Supply Model: Canadian Evidence on Male Behavior," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 460-477, July.
    17. Miquel Faig, 2008. "Labor Market Cycles and Unemployment Insurance Eligibility," 2008 Meeting Papers 183, Society for Economic Dynamics.
    18. Vijlbrief, J.A., 1990. "The effects of unemployment insurance on the labour market," Serie Research Memoranda 0031, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    19. Miquel Faig & Min Zhang, 2012. "Labor Market Cycles, Unemployment Insurance Eligibility, and Moral Hazard," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 41-56, January.
    20. Iossa, Elisabetta & Martimort, David, 2015. "Pessimistic information gathering," Games and Economic Behavior, Elsevier, vol. 91(C), pages 75-96.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jlabec:v:13:y:1995:i:4:p:623-52. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JOLE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.