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A note on the unemployed individual's marginal willingness to pay for the remaining entitlement period

Author

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  • Ommeren, J. van

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)

Abstract

This paper introduces a method to estimate the unemployed individual ‘s marginal willingness to pay for the remaining entitlement period by application of search theory. It is demonstrated that search theory implies that the unemployed individuals’ marginal willingness to pay the remaining entitlement period must be less than the value of the unemployment benefit. When benefits exhaust though, the willingness to pay for an additional period must be equal to the benefit received during that period. The empirical relevance of this method is shown by re-interpreting the studies of Meyer (1990) and Katz and Meyer (1990) .

Suggested Citation

  • Ommeren, J. van, 2002. "A note on the unemployed individual's marginal willingness to pay for the remaining entitlement period," Serie Research Memoranda 0013, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    • Handle: RePEc:vua:wpaper:2002-13
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    More about this item

    Keywords

    unemployment duration; unemployment benefits; marginal willingness to pay; search theory; nonstationary model;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • 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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