Research Papers in Economics, Department of Economics, Stockholm University
In-Work Benefits in Search Equilibrium
() and Mirco Tonin
Abstract: We study the general equilibrium effects of in-work
beneifts in a search framework. Introducing in-work benefits reduces
equilibrium unemployment, moderate wages, and boost participation and
search. Total employment increases as a result. Considering in-work
benefits in a general equilibrium setting reveals that employment increases
mainly though the impact on job creation. This is in contrast to what is
usually stressed, namely that employment increases because individuals are
provided with incentives to take a job.
Keywords: In-work benefits; unemployment; participation; (follow links to similar papers)
JEL-Codes: J21; J38; (follow links to similar papers)
40 pages, December 21, 2006
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