Working Paper Series, Department of Economics, Uppsala University
No 2010:2:
Family Job Search, Wage Bargaining, and Optimal Unemployment Insurance
Susanne Ek and Bertil Holmlund ()
Abstract: The paper develops an equilibrium search and matching
model where two-person families as well as singles participate in the labor
market. We show that equilibrium entails wage dispersion among equally
productive risk-averse workers. Marital status as well as spousal labor
market status matter for wage outcomes. In general, employed members of
two-person families receive higher wages than employed singles. The model
is applied to a welfare analysis of alternative unemployment insurance
systems, recognizing the role of spousal employment as partial substitute
for public insurance. The optimal system involves benefit differentiation
based on marital status as wellas spousal labor market status. Optimal
differentiation yields small welfare gains but gives rise to large wage
differentials.
Keywords: Job search; wage bargaining; wage differentials; unemployment; unemployment insurance; (follow links to similar papers)
JEL-Codes: J31; J64; J65; (follow links to similar papers)
30 pages, January 27, 2010
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