Unemployment benefits, contract length and nominal wage flexibility

We show in a union-bargaining model that a decrease in the unemployment benefit level increases not only equilibrium employment, but also nominal wage flexibility, and thus reduces employment variations in the case of nominal shocks. Long-term wage contracts lead to higher expected real wages and he...

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Bibliographische Detailangaben
1. Verfasser: Calmfors, Lars (VerfasserIn)
Weitere Verfasser: Johansson, Asa (VerfasserIn)
Format: UnknownFormat
Sprache:eng
Veröffentlicht: Munich Univ., Center for Economic Studies 2001
Schriftenreihe:CESifo working paper series 514
Schlagworte:
Lohnrigidität > Arbeitslosenversicherung > Verhandlungstheorie des Lohnes > Tarifvertrag > Dauer > Natürliche Arbeitslosenquote > Konjunktur > Theorie > Arbeitspapier > Graue Literatur
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Beschreibung
Zusammenfassung:We show in a union-bargaining model that a decrease in the unemployment benefit level increases not only equilibrium employment, but also nominal wage flexibility, and thus reduces employment variations in the case of nominal shocks. Long-term wage contracts lead to higher expected real wages and hence higher expected unemployment than short-term contracts. Therefore lower benefits reduce the expected utility gross of contract costs of a union member more with long-term than with short-term contracts and thus create an incentive for shorter contracts. Incentives for employers work in the same direction. Lower taxes associated with lower benefits also tend to make short-term contracts more attractive.
Beschreibung:Literaturverz. S. 27 - 28
Internetausg.: ftp://129.187.96.124/CESifo_WP/514.pdf
Beschreibung:35 S
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