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The optimal design of unemployment insurance and employment protection a first pass by Olivier Blanchard

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Published by Massachusetts Institute of Technology, Dept. of Economics in Cambridge, MA .
Written in English


Book details:

About the Edition

Much of the policy discussion of labor market institutions has been at the margin, with proposals to tighten unemployment benefits, reduce employment protection, and so on. There has been little discussion however of what the ultimate goal and architecture should be. The paper focuses on characterizing this ultimate goal, the optimal architecture of labor market institutions. We start our analysis with a simple benchmark, with risk-averse workers, risk-neutral firms and random shocks to productivity. In this benchmark, we show that optimality requires both unemployment insurance and employment protection - in the form of layoff taxes; it also requires that layoff taxes be equal to unemployment benefits. We then explore the implications of four broad categories of deviations: limits on insurance, limits on layoff taxes, ex-post wage bargaining, and heterogeneity of firms or workers. We show how the architecture must be modified in each case. The scope for insurance may be more limited than in the benchmark; so may the scope for employment protection. The general principle remains however, namely the need to look at unemployment insurance and employment protection together, rather than in isolation. Keywords: Unemployment insurance, employment protection, unemployment benefits, layoff taxes, layoffs, severance payments. JEL Classifications: D60, E62, H21, J30, J32, J38, J65.

Edition Notes

Statement[by] Olivier Blanchard
SeriesWorking paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 04-15, Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 04-15.
ContributionsTirole, Jean, Massachusetts Institute of Technology. Dept. of Economics
The Physical Object
Pagination44 p. ;
Number of Pages44
ID Numbers
Open LibraryOL24640572M
OCLC/WorldCa55231797

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An illustration of an open book. Books. An illustration of two cells of a film strip. Video. An illustration of an audio speaker. Audio An illustration of a " floppy disk. The optimal design of unemployment insurance and employment protection: a first pass Item Preview remove-circlePages: Downloadable! Much of the policy discussion of labor market institutions has been at the margin, with proposals to tighten unemployment benefits, reduce employment protection, and so on. There has been little discussion however of what the ultimate goal and architecture should be. The paper focuses on characterizing this ultimate goal, the optimal architecture of labor market institutions. The Optimal Design of Unemployment Insurance and Employment Protection. A First Pass Olivier Blanchard and Jean Tirole NBER Working Paper No. April , Revised November JEL No. D60, E62, H21, J30, J32, J38, J65 ABSTRACT Much of the policy discussion of labor market institutions has been at the margin, withCited by: The authors use a simple model to study the optimal design of unemployment insurance and employment protection. Workers are risk averse and face the possibility of unemployment.

Unemployment insurance and employment protection are typically discussed and studied in isolation. In this paper, we argue that they are tightly linked, and we focus on their joint optimal design in a simple model, with risk-averse workers, risk-neutral firms, and random shocks to productivity. The authors use a simple model to study the optimal design of unemployment insurance and employment protection. Workers are risk averse and face the possibility of unemployment. Firms are risk neutral and face random shocks to productivity. Workers can participate in a shadow economy. The joint design of unemployment insurance and employment protection. A flrst pass.⁄ Olivier Blanchardy Jean Tirole z Septem Abstract Unemployment insurance and employment protection are typically discussed and studied in isolation. In this paper, we argue that they are tightly linked, and we focus on their joint optimal design in a simple model, with risk averse workers, risk .   Unemployment insurance and employment protection are typically discussed and studied in isolation. In this paper, we argue that they are tightly linked, and we focus on their joint optimal design. We start our analysis with a simple benchmark, with risk averse workers, risk neutral firms, and random shocks to productivity.

  Unemployment insurance and employment protection are typically discussed and studied in isolation. In this paper, we argue that they are tightly linked, and we focus on their joint optimal design . The optimal design of unemployment insurance and employment protection a first pass. NBER Working Papers, vol. Boeri, T., Conde-Ruiz, I.J., Galasso, V., Unemployment insurance and employment protection are typically discussed and studied in isolation. In this paper, we argue that they are tightly linked, and we focus on their joint optimal design in a simple model, with risk-averse workers, risk-neutral firms, and random shocks to productivity. We show that, in the "first best," unemployment. Wiemer Salverda, Daniele Checchi, in Handbook of Income Distribution, Unemployment Benefit. Even if unemployment benefits and employment protection are negatively correlated in the data (Bertola and Boeri, ), in principle they do respond to the same problem of reducing the intertemporal variability of workers’ earnings (Blanchard and Tirole, ). This may explain why.