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Optimal unemployment benefit financing scheme : A transatlantic comparison

Author

Listed:
  • Julien Albertini

    (Centre d’Études des politiques Économiques de l’Université d’Evry (EPEE et TEPP (FR CNRS no 3126)))

  • Xavier Fairise

    (Centre d’Études des politiques Économiques de l’Université d’Evry (EPEE et TEPP (FR CNRS no 3126)))

Abstract

The aim of this paper is to study the properties of an optimal unemployment benefit financing scheme in the US and in France. We wonder if firms should be taxed in proportion of their layoffs and if such a tax should correspond to a part or all of the fiscal cost induced by a dismissal. The welfare gains generated by reforms of the US and French labor market institutions are evaluated. The US labor market is initially characterized by a flexible dismissal regulation and an experience rating system. We show that making firms more responsible for the cost caused by theirs layoff is welfare enhancing. Concerning the French labor market, we find that a more flexible dismissal regulation combined with an experience rating tax may significantly improve labor market performances. In both cases, the efficient layoff tax is close to the expected fiscal cost of an unemployed worker.

Suggested Citation

  • Julien Albertini & Xavier Fairise, 2009. "Optimal unemployment benefit financing scheme : A transatlantic comparison," Documents de recherche 09-01, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    • Handle: RePEc:eve:wpaper:09-01
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    DSGE models; matching; firing tax; experience rating;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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