This paper deals with the effects of implementing a basic income on the labor supply side. The German welfare as well as tax and social contributions system are investigated. The results clarify that the abolishment of the so-called unemployment trap due to a basic income policy is a decisive advantage of this approach. In order to demonstrate possible labor supply side reactions to a basic inc...

This paper establishes robust dynamic features of the worker reallocation process in the U.S. labor market. I use structural VARs with sign restrictions, which take the form of restricting the short-run negative relationship between vacancies and unemployment (i.e., Beveridge curve). Despite the “weakness” of these restrictions, they reveal a clear, unambiguous pattern that when unemployment in...

In recessions, the stock market falls more than in proportion to corporate profit. The discount rate implicit in the stock market rises. All types of investment fall, including employers’ investment in job creation. According to the leading view of unemployment—the Diamond-Mortensen-Pissarides model—when the incentive for job creation rises, the labor market tightens and unemployment falls. Emp...

In the framework of a search and matching model, when search effort enters the labor market matching function, search effort by one worker generates a negative externality on other workers searching for jobs. The solution to the social planner’s problem may not be decentralized in a competitive market. Calibration shows that the current US unemployment insurance (UI) system generates an 8.07% w...

This study analyzes the cyclical and short-term determinants of the labor supply of married women in two-earner families. Working wives often face conflicting signals in responding to cyclical downturns in labor market conditions and the unemployment of their spouses; they may, for example, want to increase hours of work because of lower family income but find themselves unable to do so because...

Conventional models of equilibrium unemployment typically imply that proportional taxes on labor earnings are neutral with respect to unemployment as long as the tax does not affect the replacement rate provided by unemployment insurance, i.e., unemployment benefits relative to after-tax earnings. When home production is an option, the conventional results may no longer hold. This paper uses a ...

We study unemployment insurance (UI) in a general equilibrium environment in which unemployed workers only receive benefits for a finite length of time. Although all workers have identical productivity and leisure value, the random arrival of job offers creates ex-post differences with respect to their time remaining until benefit expiration. Firms, which are also homogenous, can exploit these ...

Unemployment is a major concern for the transforming economies of Central and Eastern Europe. The "flow approach" to labor markets suggests that unemployment is an important complement to the trans formation process and that labor market institutions will help determine the long run rate of unemployment in these economies. Considerable cross-country variation can be observed in Eastern Europe w...